TYCO INTERNATIONAL LTD /BER/ - 10-K Annual Report

Back to GetFilings.com

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001
OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

001-13836

(COMMISSION FILE NUMBER)

TYCO INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)

BERMUDA NOT APPLICABLE
(Jurisdiction of Incorporation) (IRS Employer Identification No.)

THE ZURICH CENTRE, SECOND FLOOR, 90 PITTS BAY ROAD, PEMBROKE HM 08, BERMUDA
(Address of registrant's principal executive office)

441-292-8674
(Registrant's telephone number)
------------------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /.

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III or this Form 10-K or any amendment to this
Form 10-K. / /.

The aggregate market value of voting common shares held by nonaffiliates of
registrant was $113,942,034,049 as of December 20, 2001.

The number of common shares outstanding as of December 20, 2001 was
1,996,306,425.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's proxy statement to be filed within 120 days of
the close of the registrant's fiscal year in connection with the registrant's
2002 annual shareholders' meeting are incorporated by reference into Part III of
this Form 10-K.

See pages 20 to 22 for the exhibit index.
------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART I

ITEM 1. BUSINESS

INTRODUCTION

Tyco International Ltd. ("we" or "Tyco") is a diversified manufacturing and
service company that, through its subsidiaries:

- designs, manufactures and distributes electrical and electronic
components, multi-layer printed circuit boards, energy solutions and power
products; and designs, manufactures, installs, operates and maintains
undersea cable communications systems;

- designs, manufactures, installs and services fire detection and
suppression systems; designs, installs, monitors and maintains electronic
security systems; and designs, manufactures, distributes and services
specialty valves;

- designs, manufactures and distributes disposable medical supplies and
other specialty products; and

- offers vendor, equipment, commercial, factoring, consumer and structured
financing and leasing capabilities through Tyco Capital.

See Notes 24 and 25 to the Consolidated Financial Statements for certain
segment and geographic financial data relating to our business.

Tyco's strategy is to be the low-cost, high-quality producer and provider in
each of our industrial markets and, through Tyco Capital, to provide innovative
financing and leasing solutions to independent customers and in support of our
industrial segments. We promote our leadership position by investing in existing
businesses, developing new markets and acquiring complementary businesses and
products. Combining the strengths of our existing operations and our business
acquisitions, we seek to enhance shareholder value through increased earnings
per share and strong cash flows.

I. ELECTRONICS

Tyco is the world's leading supplier of passive electronic components and a
leading provider of undersea fiber optic networks and services. Our products and
services include:

- designing, engineering and manufacturing of electronic connector systems,
fiber optic components, wireless devices, heat shrink products, power
components, wire and cable, relays, sensors, touch screens, smart card
components, identification and labeling products, energy solutions, power
products, switches and battery assemblies; and

- designing, manufacturing, installing, operating and maintaining undersea
cable communications systems through our telecommunications subsidiary,
TyCom Ltd. ("TyCom"), and selling bandwidth on our own cable network.

TYCO ELECTRONICS

Tyco Electronics designs, manufactures and markets a broad range of
electronic, electrical and electro-optic passive and active devices and an
expanding number of interconnection systems and connector-intensive assemblies,
as well as wireless products including radar sensors, global positioning
satellite systems components, silicon and gallium arsenide semiconductors,
broadband Local Multipoint Distribution Systems ("LMDS") and microwave
sub-systems. Tyco Electronics' products have potential uses wherever an
electronic, electrical, computer or telecommunications system is involved, and
are becoming increasingly critical to the performance of these systems as signal
speeds and bandwidth

1

increase to accommodate voice, data and video communications convergence. Tyco
Electronics manufactures and sells more than 200,000 parts in over 450 global
product lines, including terminals, fiber optic, printed circuit board and cable
connectors and assemblies, cable and cabling systems, and related application
tools and application tooling equipment.

The acquisition of the Power Systems business unit of Lucent
Technologies, Inc., now known as Tyco Electronics Power Systems ("TEPS"), in
December 2000 greatly expanded our product line and complemented existing
products and services. TEPS provides a full line of energy solutions and power
products for telecommunications service providers and for the computer industry.
TEPS products include AC/DC and DC/DC power supplies, inverters and back-up
power systems. TEPS also offers engineering and installation service
capabilities.

Tyco Electronics markets via direct sales and distributors to customers
including original equipment manufacturers ("OEMs") and their subcontractors,
utilities, government agencies, value-added resellers and those who install,
maintain and repair equipment. These customers are found in the automotive,
communications, computer, consumer electronics, industrial, commercial energy
and networking industries. In total, Tyco Electronics serves over 200,000
customers located in over 55 countries, and maintains a strong local presence in
the geographical areas in which it operates, including the Americas, Europe and
the Asia-Pacific region.

The markets that Tyco Electronics operates in are highly competitive. Tyco
Electronics faces competition across its product lines from other companies
ranging in size from large, diversified manufacturers to small, highly
specialized manufacturers.

TYCO PRINTED CIRCUIT GROUP

Tyco Printed Circuit Group ("TPCG") is one of the largest independent
manufacturers of complex multi-layer printed circuit boards and backplane
assemblies in the United States. TPCG manufactures multi-layer boards of up to
68 layers. TPCG also produces sophisticated flexible-rigid circuits and
assemblies for use in commercial, aerospace and military applications. TPCG's
backplane facilities produce soldered, press-fit and surface mount backplane
assemblies. In addition, these facilities provide turnkey manufacturing services
including full "box build" products. Printed circuit boards and backplane
products are manufactured on a job order basis to the customers' design
specifications. The majority of sales are derived from high-density multi-layer
boards.

TPCG markets its products primarily through a direct sales force and, to a
lesser extent, through a network of independent manufacturers' representatives.
Customers are OEMs and contract manufacturers in the communications, computer,
aircraft, military and other industrial and consumer electronics industries. We
compete with several other large independent and captive companies that
manufacture printed circuit boards. Competition is on the basis of quality,
reliability, price and timeliness of delivery.

TYCO ELECTRICAL AND METAL PRODUCTS

Tyco Electrical and Metal Products manufactures electrical raceway and
related products in North America, Europe and the Asia-Pacific region. Our
products include steel electrical conduit, pre-wired armored cable, flexible
electrical conduit, metal framing systems, cable tray and cable ladder and
related products utilized in the construction, industrial and original equipment
markets. In North America, Allied Tube & Conduit is the leading manufacturer of
steel electrical conduit, and AFC Cable Systems is the leading manufacturer of
steel and aluminum pre-wired armored cable. Georgia Pipe manufactures plastic
conduit. Allied manufactures metal framing and support systems and electrical
cable tray and cable ladders in North America and sells them under the
Powerstrut, Unistrut and T.J. Cope trade names. We also manufacture metal
framing and support products in Europe, which we sell

2

under the Unistrut and other trade names. In Australia and Asia, we manufacture
and sell these products under the Unistrut, A.C.S. and other trade names. We
manufacture specialty fastening products in the United Kingdom under the
Lindapter and Anccon trade names. We manufacture and distribute welded and drawn
steel tube products in the United Kingdom under the trade names of Newman
Monmore, Newman Phoenix, Tyco Tube Components and HUB LeBas. We manufacture and
distribute specialty steel strip products in the United Kingdom under the JB&S
Lees, Firth Cleveland Steel Strip and Ductile Stourbridge trade names and in
Brazil under the trade names of Frefer and Dinaco.

TELECOMMUNICATIONS

The Telecommunications segment is comprised of the operations of TyCom Ltd.
and its subsidiaries.

TyCom is a leading provider of undersea fiber optic networks and services.
TyCom's products and services include: designing, manufacturing and installing
undersea cable communications systems; servicing and maintaining major undersea
cable networks; and designing, manufacturing and installing a global undersea
fiber optic network, known as the TyCom Global Network-TM- ("TGN"). TyCom
operates, maintains and sells bandwith capacity on the TGN.

The transatlantic segment of the TGN became operational in June 2001, and
the Company continues the buildout of its global network, expected to be
operational by the end of fiscal 2002. The timing and sequence of implementing
additional phases of the network will be based on future needs.

In July 2000, TyCom sold approximately 14% of its common shares in an
initial public offering. Net proceeds from the offering were approximately
$2.1 billion, which were used primarily in the construction and deployment of
the TGN. On December 18, 2001, we completed our amalgamation with TyCom and each
of the approximately 56 million TyCom common shares not owned by Tyco were
converted into the right to receive 0.3133 of a Tyco common share. Upon
completion of the amalgamation, TyCom became a wholly-owned subsidiary of Tyco.

TyCom's sales and marketing personnel consist of professionals with
extensive telecommunications, technical or service backgrounds, and are located
in offices in Bermuda, France, Singapore, the United Kingdom and the United
States.

As a supplier of undersea fiber optic cable systems, TyCom competes on a
worldwide basis primarily against two other providers: Alcatel-Alsthom
("Alcatel") and KDD Submarine Cable Systems Inc. ("KDD"). Other companies
compete on a more limited basis, either as subcontractors to other providers or
as suppliers of regional systems. Alcatel, like TyCom, is vertically integrated
and produces its own cable, whereas KDD utilizes a Japanese cable manufacturer.
Participants in this market compete on the basis of, among other things, price,
technology, time-to-market, the provision of financing and regional and
long-term relationships.

With respect to the TGN, TyCom faces competition in the sale of bandwidth
capacity from existing and planned fiber optic cable networks, as well as
satellite providers and, on certain routes, terrestrial networks, including
those owned by Global Crossing Ltd., FLAG Telecom, and various participants in
cable system consortia. As a provider of undersea cable maintenance, TyCom
competes primarily with Global Marine Systems Ltd., a subsidiary of Global
Crossing Ltd., as well as Alcatel and KDD.

We currently operate TyCom as part of our Electronics group; however TyCom
is presented separately as the Telecommunications segment for reporting purposes
through the period covered by this report.

3

II. FIRE AND SECURITY SERVICES

Tyco is the world's leading provider of both fire protection services and
electronic security services. Our products and services include:

- designing, installing and servicing a broad line of fire detection,
prevention and suppression systems, and manufacturing and servicing of
fire extinguishers and related products;

- designing, installing, monitoring and maintaining electronic security
systems;

- designing and manufacturing valves and related products; and

- providing a broad range of consulting, engineering and construction
management and operating services for water, wastewater, environmental,
transportation and infrastructure markets.

FIRE PROTECTION CONTRACTING AND SERVICES

We design, fabricate, install and service automatic fire sprinkler systems,
fire alarm and detection systems, and special hazard suppression systems in
buildings and other installations. Tyco's fire protection contracting and
service business utilizes a worldwide network of sales offices, operating
globally under various trade names including Simplex/Grinnell, Wormald,
Mather & Platt, Total Walther, O'Donnell Griffin, Dong Bang, Ansul and Tyco.

We install fire protection systems in both new and existing structures.
Typically, contracts for fire protection installation are let by owners,
architects, construction engineers and mechanical or general contractors. In
recent years, the business of retrofitting existing buildings has grown as a
result of legislation mandating the installation of fire protection systems and
also as a result of lower insurance costs available for structures with
automatic sprinkler systems. We continue to focus on system maintenance and
inspection, which has become a more significant part of our business.

The majority of the fire suppression systems installed by Tyco are
water-based. However, we are also the world's leading provider of custom
designed fire hazard protection systems which incorporate various specialized
non-water agents such as foams, dry chemicals and gases. Systems using agents
other than water are especially suited to fire protection in certain
manufacturing, power generation, petrochemical, offshore oil exploration,
transportation, telecommunications, mining and marine applications.

In Australia, New Zealand and Asia, Tyco also engages in the installation of
electrical wire and related electrical equipment in new and existing structures
and provides specialized electrical contracting services, including applications
for railroad and bridge construction, primarily through its O'Donnell Griffin
division.

Substantially all of the mechanical components (and, in North America, a
high proportion of the pipe) used in the fire protection systems installed by us
are manufactured by us. We also have fabrication plants worldwide that cut,
thread and weld pipe, which is then shipped with other prefabricated components
to job sites for installation. We have developed our own computer-aided-design
technology that reduces the time required to design systems for specific
applications and coordinates the fabrication and delivery of system components.

Our acquisition of Simplex Time Recorder in January 2001 expanded our line
of fire protection and security products. Simplex manufactures fire and security
products and communications systems including control panels, detection devices
and system software. Simplex also installs, monitors and services fire alarms,
security systems and access control systems.

Competition in the fire protection contracting business varies by geographic
region. In North America, Tyco competes with hundreds of smaller contractors on
a regional or local basis for the

4

installation of fire suppression and fire alarm and detection systems. Many of
the regional and local competitors employ non-union labor. In Europe, Tyco
competes with many regional or local contractors on a country-by-country basis.
In Australia, New Zealand and Asia, we compete with a few large fire protection
contractors, as well as with many smaller regional or local companies. Tyco
competes for fire protection systems contracts primarily on the basis of price,
service and quality.

Tyco also manufactures and sells a wide variety of products to other fire
protection contractors and fabricators of fire protection systems. These
products include a complete line of fire sprinkler devices, valves, plastic pipe
and pipe fittings and ductile iron pipe couplings. We manufacture these products
in the United States, the United Kingdom, Germany, China and Malaysia and sell
them under the Central Sprinkler, GEM Sprinkler, Star Sprinkler and Spraysafe
trade names.

Central Sprinkler maintains a network of distribution facilities in the
United States which stock and sell a full line of fire protection products
directly to contractors and installers. GEM Sprinkler and Star Sprinkler sell
fire protection products through a network of independent distributors. In
Canada, Central America, South America and the Asia-Pacific region, we sell fire
protection products through independent distribution and in some cases directly
to fire protection contractors. In Europe and the Middle East, we operate a
number of company-owned distribution facilities which stock and sell a full line
of fire protection, mechanical and other flow control products. Competition for
the sale of fire products is based on price, delivery, breadth of product line
and specialized product capability. The principal competitors are specialty
products manufacturing companies based in the United States, with other smaller
competitors in Europe and Asia.

In addition, our Ansul subsidiary manufactures and sells various lines of
dry chemical, liquid and gaseous portable fire extinguishers and related agents
for industrial, government, commercial and consumer applications. Ansul also
manufactures and sells special hazard fire suppression systems designed for use
in restaurants, marine applications, mining applications, the petrochemical
industry, confined industrial spaces and commercial spaces housing electronic
and other delicate equipment. Ansul also manufactures spill control products
designed to absorb, neutralize and solidify spills of various hazardous
materials.

Our acquisition of Scott Technologies, Inc. in May 2001 expanded our line of
fire protection products. Scott manufacturers respiratory systems and other
life-saving devices for the firefighting and aviation markets.

ELECTRONIC SECURITY SERVICES

We are the world's leading provider of electronic security services and
event monitoring, which includes the monitoring of burglar alarms, fire alarms,
heating services, medical alert systems and activities where around the clock
monitoring and response is required. We also offer regular inspection and
maintenance services so that systems will function properly and will be upgraded
as technology or risk profiles change. We offer our services throughout North
America, Europe, the Middle East, the Asia-Pacific region, Latin America and
South Africa. Our services are provided principally under the ADT trade name and
also under other trade names including Alarmguard, Thorn Security, Total
Walther, Holmes Protection, CIPE, CAPS, Zettler, Sonitrol, TEPG and Armourguard.

Our acquisition of the electronic security systems businesses of Cambridge
Protection Industries, L.L.C. ("SecurityLink") in July 2001 expanded our
services offered, particularly our Personal Emergency Response Systems and
offender monitoring services. SecurityLink also provides electronic security
systems to residential, commercial and government customers.

Electronically monitored security systems involve the installation and use
on a customer's premises of devices designed to detect or react to various
occurrences or conditions, such as intrusion, movement, fire, smoke, flooding,
environmental conditions (including temperature or humidity

5

variations), industrial operations (such as water, gas or steam pressure and
process flow controls) or other hazards. These detection devices are connected
to a microprocessor-based control panel which communicates through telephone
lines to a monitoring center, often located at remote distances from the
customer's premises, where alarm and supervisory signals are received and
recorded. In most systems, control panels can identify the nature of the alarm
and the areas within a building where the sensor was activated. Depending upon
the type of service for which the subscriber has contracted, monitoring center
personnel respond to alarms by relaying appropriate information to the local
fire or police departments, notifying the customer or taking other appropriate
action, such as dispatching employees to the customer's premises. In some
instances, the customer may monitor the system at its own premises or the system
may be connected to local fire or police departments.

We provide electronic security services to both commercial and residential
customers. Our commercial customers include financial institutions, industrial
and commercial businesses, facilities of federal, state and local government
departments, defense installations, and health care and educational facilities.
We provide residential electronic security services primarily in North America
and Europe, with a growing presence in the Asia-Pacific region. Our customers
are often prompted to purchase security systems by their insurance carriers,
which may offer lower insurance premium rates if a security system is installed
or require that a system be installed as a condition to coverage.

Our electronic security systems and products are tailored to our customers'
specific needs and include electronic monitoring services that provide intrusion
and fire detection, as well as card or keypad activated access control systems
and closed circuit television systems. Systems may be monitored by the customer
at its premises or connected to one of our monitoring centers. In either case,
we usually provide support and maintenance through service contracts. It has
been our experience that commercial and residential contracts are generally
renewed after their initial terms. Contract discontinuances occur principally as
a result of customer relocation or closure. Systems installed at commercial
customers' premises may be owned by us or by our customer. We usually retain
ownership of standard residential systems, but more sophisticated residential
systems are usually purchased by our customers.

We market our electronic security services to commercial and residential
customers through a direct sales force and an authorized dealer network.
Commercial customers are serviced by a separate national accounts sales force.
We also utilize advertising, telemarketing and direct mail to market our
services.

We purchase most of the electronic components we install. Most of these
components are manufactured outside of the United States by a number of
suppliers, and many of the components are manufactured to our specifications. We
manufacture certain alarm, detection and activation devices and central
monitoring station equipment both for installation by us as well as for sale to
other installers of alarm and detection devices.

The electronic security services business in North America is highly
competitive, with a number of major firms and approximately 12,000 smaller
regional and local companies. Tyco also competes with several national companies
and several thousand regional and local companies in Europe, the Middle East,
the Asia-Pacific region, Latin America and South Africa. Competition is based
primarily on price in relation to quality of service. We believe that the
quality of our electronic security services is higher than that of many of our
competitors and, therefore, our prices may be higher than those charged by our
competitors.

In November 2001, we completed our acquisition of Sensormatic Electronics
Corporation, a supplier of electronic security solutions to the retail,
commercial and industrial marketplaces. Sensormatic is also the leader in
integrated source tagging, a process where consumer goods manufacturers apply
anti-theft tags at the point of packaging or manufacturing.

6

TYCO VALVES AND CONTROLS

Tyco manufactures both standard and highly specialized valves in a wide
variety of configurations, body types, materials, pressure ratings and sizes. We
also manufacture related equipment and products such as valve actuators, gauges,
positioners, valve control systems, vapor control products, heat tracing and
leak detection systems and other related products. These products are
manufactured in Tyco's facilities located in North America, Europe, South
America and the Asia-Pacific region. The Tyco Valve and Control group's products
are used in power generation, chemical, petrochemical, oil and gas, water
distribution, wastewater, pulp and paper, commercial irrigation, mining,
industrial process, food and beverage, plumbing, HVAC and other applications.
Tyco Valves and Controls also provides engineering, design, inspection, repair
and commissioning services.

Tyco's valves and related products are sold under many trade names,
including Keystone, Grinnell, Hindle, KTM, Flow Control Technologies, Gachot,
Richards, Sapag, Winn, Vanessa, Raimondi, Fasani, Sempell, Descote, Klein,
Biffi, Morin Actuators, Westlock Controls, Crosby, Anderson Greenwood, Yarway,
Valvtron, Neotecha, Belucci, Intecva, Bayard, Belgicast, Whessoe Varec, Bailey
Birkett, Cash, Erhard, Schmieding and Frischhut. Tyco Valves and Controls sells
heat tracing products and services under the Raychem HTS, Tracer Industries,
Pyrotenax, Accutron and Isopad names.

We sell valves and related products in some geographic areas directly
through our internal sales force and in other geographic areas through a network
of independent distributors and manufacturers' representatives. The valve
industry is highly fragmented, and we compete against a number of international,
national and local manufacturers as well as against specialized manufacturers on
the basis of price, delivery, breadth of product line and specialized product
capability.

In Australia, Tyco Valves and Controls manufactures ductile and steel pipe,
steel fittings, valves and related products primarily for the water industry at
several locations under the trade name Tyco Water. We also manufacture a line of
plastic pipe and fittings in Australia and Malaysia.

TYCO INFRASTRUCTURE

Through our Tyco Infrastructure Services subsidiary, we provide a broad
range of environmental, consulting and engineering services. Tyco
Infrastructure's principal services consist of a full-spectrum of water,
wastewater, environmental and hazardous waste management services. These
services include infrastructure and transportation design and construction
services for institutional, civic, commercial and industrial clients; design,
construction management, project financing and facility operating services for
water and wastewater treatment facilities for municipal and industrial clients;
and transportation engineering and consulting. Tyco Infrastructure operates
through a network of offices in the United States, Canada, the United Kingdom,
Mexico, Brazil, Singapore, Germany and Sweden. Tyco Infrastructure competes with
a number of international, national, regional and local companies on the basis
of price and the breadth and quality of services.

III. HEALTHCARE AND SPECIALTY PRODUCTS

Tyco is a world leader in the medical products industry and has a strong
leadership position in the plastics industry. Our products include:

- a wide variety of disposable medical products, including wound care and
closure products, syringes and needles, sutures and surgical staplers,
products used for vascular therapy and respiratory care, infant medical
accessories, incontinence products, anesthetic supplies, electrosurgical
instruments and laparoscopic instruments; and

7

- polyethylene film and film products such as flexible plastic packaging,
plastic bags and sheeting, coated and laminated packaging materials, tapes
and adhesives, plastic garment hangers and pipeline coatings for the oil,
gas and water distribution industries.

TYCO HEALTHCARE GROUP

The Tyco Healthcare Group consists of five primary business units including
Kendall Healthcare, Tyco Healthcare International, U.S. Surgical Corporation,
ValleyLab and Mallinckrodt.

Kendall Healthcare manufactures and markets worldwide a broad range of
needles, syringes, electrodes and wound care, specialized paper and film,
vascular therapy, urological care, incontinence care and other nursing care
products to hospitals and to alternate site healthcare customers. Its Confab
unit sells store brand baby diapers and incontinence and feminine hygiene
products through retail outlets in the United States and Canada.

Kendall Healthcare distributes its products in the United States through its
own sales force and through a network of more than 250 independent distributors.
Kendall Healthcare is the industry leader in gauze products with its
Kerlix-Registered Trademark- and Curity-Registered Trademark- brand dressings.
Kendall Healthcare's other core product category consists of its vascular
therapy products, principally anti-embolism stockings, marketed under the
T.E.D.-Registered Trademark- brand name, sequential pneumatic compression
devices sold under the SCD-Registered Trademark- brand name and a venous plexus
foot pump. Kendall Healthcare pioneered the pneumatic compression form of
treatment and continues to be the leading participant in the pneumatic
compression and elastic stocking segments of the vascular therapy market.
Kendall Healthcare is also an industry leader in the adult incontinence market
serving the acute care, long-term care and retail markets. It offers a complete
line of disposable adult briefs, underpads and other related products.

The Kendall-LTP division, which includes Graphic Controls, manufactures and
sells a variety of disposable medical products, specialized paper and film
products. These include medical electrodes and gels for monitoring and
diagnostic tests and hydrogel wound care products, which are used primarily in
critical care, physical therapy and rehabilitative departments in hospitals.
Graphic Controls also sells operating room kits, sharps containers and other
operating room related products.

Tyco Healthcare International is responsible for the manufacturing,
marketing, distribution and export of the Tyco Healthcare Group products outside
of the United States. Tyco Healthcare International markets directly to
hospitals and medical professionals, as well as through independent
distributors, with a presence in more than 75 countries. Although the mix of
product lines offered varies from country to country, its operations are
organized primarily into three geographic regions: Europe, Latin America and the
Asia-Pacific region.

U.S. Surgical, a leader in innovative wound closure products and
laparoscopic instrumentation, develops, manufactures and markets its products to
hospitals throughout the world. Its products include surgical staplers, sutures
and disposable laparoscopic instrumentation, in addition to numerous other
products used in surgical and medical specialties including spine surgery,
cardiovascular surgery, cancer biopsies and orthopedic surgery. The acquisition
of Innerdyne, Inc. in December 2000 expanded our product line and complemented
existing products and services. Innerdyne manufactures and distributes patented
radial dilating access devices used in minimally invasive medical surgical
procedures.

ValleyLab is a leading manufacturer and marketer of electrosurgical and
ultrasonic surgical products used in open and minimally invasive surgical
procedures. Additional product lines relate to radio frequency energy and vessel
sealing technology.

During Fiscal 2001, we acquired Mallinckrodt Inc., a global company whose
products are used primarily for respiratory care, diagnostic imaging and pain
relief. Mallinckrodt is the leader in the global respiratory care market,
alternate care market, diagnostic imaging, and bulk pharmaceuticals

8

markets. Mallinckrodt's products are sold to hospitals and alternate care sites,
clinical laboratories, pharmaceutical manufacturers and other customers on a
worldwide basis.

Tyco Healthcare's competitors include Johnson & Johnson, Becton Dickinson,
and Smith and Nephew, among others.

In May 2001, we entered into an agreement to acquire C.R. Bard, Inc., a
multinational developer, manufacturer and marketer of healthcare products used
for vascular, urological and oncological diagnosis and intervention, as well as
surgical specialties. The acquisition has been approved by Bard shareholders but
is still contingent on regulatory clearance under United States anti-trust laws.

TYCO PLASTICS AND ADHESIVES

Tyco Plastics & Adhesives consists of Tyco Plastics, A&E Products, Tyco
Adhesives and Ludlow Coated Products.

Tyco Plastics manufactures polyethylene-based films, packaging products,
bags and sheeting in a wide range of size, gauge, strength, stretch capacity,
clarity and color. Tyco Plastics' products include:
Ruffies-Registered Trademark-, a national brand consumer trash bag sold to mass
merchants, grocery chains and other retail outlets, and
Film-Gard-Registered Trademark-, a leading plastic sheeting product sold to
consumers and professional contractors through do-it-yourself outlets, home
improvement centers and hardware stores. A wide range of Film-Gard products are
sold for various uses, including painting, renovation, construction, landscaping
and agriculture. Tyco Plastics sells its products directly to retailers for
resale, to distributors for resale or directly to end-users. Tyco Plastics
competes with other nationally recognized brands and also many smaller regional
producers on the basis of price, delivery, breadth of product line and
specialized product capabilities. Manufacturing facilities are located
throughout the United States to ensure proper customer service and competitive
transportation costs.

A&E Products manufactures and sells garment hangers throughout the world and
associated apparel products and packing materials to garment manufacturers and
merchants in the Americas. The majority of A&E Products' clientele are garment
manufacturers, national, regional and local retailers, as well as merchants. In
addition to the manufacturing and selling of new hangers, A&E Products also
operates hanger-recycling facilities in the United States and Europe. Used
hangers are bought from various retailers; they are then sorted, processed and
repackaged for sale back to the general marketplace.

The Tyco Adhesives division manufactures and markets specialty adhesive
products and tapes for industrial applications, including external corrosion
protection products for oil, gas and water pipelines. Tyco Adhesives also
produces duct, foil, strapping, packaging and electrical tapes and spray
adhesives for industrial and consumer markets worldwide and manufactures cloth
and medical tapes for Tyco Healthcare and others. Products are sold under the
Polyken-Registered Trademark-, Nashua Tape-Registered Trademark-,
Raychem-Registered Trademark-, Betham-Registered Trademark- and National-TM-
brand names.

Ludlow Coated Products produces protective packaging and other materials
made of coated or laminated combinations of paper, polyethylene and foil. Ludlow
markets its laminated and coated products through its own sales force and
through independent manufacturers' representatives. Ludlow competes with many
large manufacturers of laminated and coated products on the basis of price,
service, marketing coverage and custom application engineering. It has various
specialized competitors in different markets.

9

IV. TYCO CAPITAL

Through its Tyco Capital subsidiaries, Tyco is a leading source of financing
and leasing capital for many of today's leading industries. Tyco Capital's
services include:

- commercial financing and leasing--offering equipment, commercial factoring
and structured financing; and

- specialty financing and leasing--consumer lending and retail sales and
vendor financing.

On June 1, 2001, Tyco acquired The CIT Group, Inc. ("CIT"), an independent
commercial finance company, now Tyco Capital Corporation. The Tyco Capital
segment represents Tyco Capital Corporation and all its subsidiaries and
reflects their results of operations from June 2, 2001. In addition, Tyco
Capital includes certain international subsidiaries that were sold by Tyco
Capital Corporation to a non-U.S. subsidiary of Tyco on September 30, 2001. Tyco
Capital Corporation and its subsidiaries will continue to operate and report
their consolidated results separately as a wholly-owned unit of Tyco. We refer
you to the Transition Report on Form 10-K for the period ended September 30,
2001 of Tyco Capital Corporation for a more detailed description of the
business.

Tyco Capital's commercial lending and leasing businesses are diverse and
offer a wide range of financing and leasing products to small, midsize and
larger companies across a wide variety of industries, including: manufacturing,
retailing, transportation, aerospace, construction, technology, communication
and various service related industries. Tyco Capital offers direct loans and
leases, operating leases, leveraged and single investor leases, secured
revolving lines of credit and term loans, credit protection, accounts receivable
collection, import and export financing, debtor-in-possession, turnaround
financing, and acquisition and expansion financing. Tyco Capital's commercial
financing and leasing activities are carried out in the following business
divisions: Equipment Financing and Leasing, Specialty Finance, Commercial
Finance and Structured Finance. Tyco Capital's Specialty Finance segment also
conducts a consumer lending business consisting primarily of home equity lending
to consumers, originated largely through a network of brokers and
correspondents.

EQUIPMENT FINANCING AND LEASING

Equipment Financing and Leasing offers secured equipment financing and
leasing products, including loans, leases, wholesale and retail financing for
distributors and manufacturers, loans guaranteed by the U.S. Small Business
Administration, operating leases, sale and leaseback arrangements, portfolio
acquisitions, municipal leases, revolving lines of credit and in-house
syndication capabilities. Equipment Financing and Leasing is a diversified,
middle market, secured equipment lender with a global presence and strong North
American marketing coverage. Products are originated through direct calling on
customers and through relationships with manufacturers, dealers, distributors
and intermediaries that have leading or significant marketing positions in their
respective industries.

The Capital Finance group within equipment financing and leasing specializes
in providing customized leasing and secured financing primarily to end-users of
commercial aircraft and railcars, including operating leases, single investor
leases, equity portions of leveraged leases, sale and leaseback arrangements, as
well as loans secured by equipment. Typical Capital Finance customers are
middle-market to larger-sized companies. New business is generated through
direct calling efforts supplemented with transactions introduced by
intermediaries and other referral sources. Capital Finance has provided
financing to commercial airlines for over 30 years. The Capital Finance
aerospace portfolio includes most of the leading U.S. and foreign commercial
airlines, with a fleet of approximately 200 aircraft having an average life of
approximately nine years.

10

SPECIALTY FINANCE

Specialty Finance product lines include vendor programs, consumer home
equity and certain small-ticket commercial financing and leasing assets.

Vendor alliances are with industry-leading equipment vendors, including
manufacturers, dealers and distributors delivering customized asset-based sales
and financing solutions in a wide array of vendor programs. These alliances
allow Specialty Finance's vendor partners to better utilize core competencies,
reduce capital needs and drive incremental sales volume. As part of the vendor
alliances, credit financing to the manufacturer's customers for the purchase or
lease of the manufacturer's products is offered, and enhanced sales tools are
offered to manufacturers and vendors, such as asset management services,
efficient loan processing, and real-time credit adjudication. Specialty Finance
has significant vendor programs in information technology and telecommunications
equipment and serves many other industries through its global network.

Consumer finance offers both fixed and variable-rate, closed-end loans and
variable-rate lines of credit. It originates, purchases and services loans
secured by first or second liens primarily on detached, single-family
residential properties. Customers borrow for the purpose of consolidating debts,
refinancing an existing mortgage, funding home improvements, paying education
expenses and, to a lesser extent, purchasing a home, among other reasons.
Specialty Finance originates loans primarily through brokers and correspondents
with a high proportion of home equity applications processed electronically over
the internet via BrokerEdge. Through experienced lending professionals and
automation, Specialty Finance provides rapid turnaround time from application to
loan funding, a characteristic considered to be critical by its broker
relationships.

COMMERCIAL FINANCE

Tyco Capital conducts the Commercial Finance operations through two
strategic business units, Commercial Services and Business Credit, both of which
focus on providing working capital for commercial enterprises via lending
arrangements collateralized by accounts receivable and inventories.

Commercial Services offers a full range of U.S. and non-U.S. customized
credit protection, lending and outsourcing services that include working capital
and term loans, factoring, receivable management outsourcing, bulk purchases of
accounts receivable, import and export financing and letter of credit programs.
Financing is provided to clients through the purchase of accounts receivable
owed to clients by their customers, as well as by guaranteeing amounts due under
letters of credit issued to the clients' suppliers, which are collateralized by
accounts receivable and other assets. The purchase of accounts receivable is
traditionally known as "factoring" and results in the payment by the client of a
factoring fee which is commensurate with the underlying degree of credit risk
and recourse, and which is generally a percentage of the factored receivables or
sales volume. Clients use Commercial Services' products and services for various
purposes, including improving cash flow, mitigating the risk of charge-offs,
increasing sales and improving management information. Further, with the
TotalSource(SM) product, clients can outsource bookkeeping, collection and other
receivable processing activities. Commercial Services generates business
regionally from a variety of sources, including direct calling efforts and
referrals from existing clients and other sources.

Business Credit offers revolving and term loans secured by accounts
receivable, inventories and fixed assets to smaller through larger-sized
companies. Through its variable interest rate senior revolving and term loan
products, Business Credit meets its customers' financing needs that are
otherwise not met through bank or other unsecured financing alternatives,
including expansion and turnaround financing and debtor-in-possession
arrangements. Business Credit typically structures financing on a secured basis,
though, from time to time, it may look to a customer's cash flow to support a
portion of the credit facility. Business Credit has focused on increasing the
proportion of

11

direct business origination to improve its ability to capture or retain
refinancing opportunities and to enhance finance income. Business is originated
through direct calling efforts and intermediary and referral sources, as well as
through sales and regional offices.

STRUCTURED FINANCE

Structured Finance operates internationally through locations in the United
States, Canada and Europe. Structured Finance provides specialized investment
banking services to the international corporate finance and institutional
finance markets by providing asset-based financing for large-ticket asset
acquisitions and project financing and related advisory services to equipment
manufacturers, corporate clients, regional airlines, governments and public
sector agencies. Communications, transportation, and the power and utilities
sectors are among the industries that Structured Finance serves.

Structured Finance also arranges financing transactions for its lending
partners, and, in some cases, participates in the transactions by taking on a
debt or equity interest. Structured Finance currently has investments in
emerging growth enterprises in the information technology, communications, life
science and consumer products industries.

SECURITIZATION PROGRAM

Tyco Capital funds most of its assets on balance sheet by accessing various
sectors of the capital markets, including the commercial paper and term debt
markets. In an effort to broaden funding sources and to provide an additional
source of liquidity, Tyco Capital has in place an array of programs to access
both the public and private asset-backed securitization markets. Current
products in these programs include receivables and leases secured by equipment
and consumer loans secured by residential real estate. Under a typical
asset-backed securitization, Tyco Capital sells a "pool" of secured loans or
leases to a special-purpose entity, typically a trust. The special-purpose
entity, in turn, issues certificates and/or notes that are collateralized by the
pool and entitle the holders thereof to participate in certain pool cash flows.
Tyco Capital retains the servicing of the securitized contracts, for which it
earns a servicing fee. Tyco Capital also participates in certain "residual" cash
flows (cash flows after payment of principal and interest to certificate and/or
note holders, servicing fees and other credit-related disbursements). At the
date of securitization, Tyco Capital estimates the "residual" cash flows to be
received over the life of the securitization, records the present value of these
cash flows based on current market rates as a retained interest in the
securitization (retained interests can include bonds issued by the
special-purpose entity, cash reserve accounts on deposit in the special-purpose
entity or interest-only receivables) and typically recognizes a gain.

COMPETITION

Tyco Capital's markets are highly competitive and are characterized by
competitive factors that vary based upon product and geographic region.
Competitors include captive and independent finance companies, commercial banks
and thrift institutions, industrial banks, leasing companies, manufacturers and
vendors with global reach. Substantial financial services operations with global
reach have been formed by bank holding, leasing, finance and insurance companies
that compete with Tyco Capital. On a local level, community banks and smaller
independent finance and mortgage companies are a competitive force. Some
competitors have substantial local market positions. Many of Tyco Capital's
competitors are large companies that have substantial capital, technological and
marketing resources. Some of these competitors are larger than Tyco Capital and
may have access to capital at a lower cost. Competition had been enhanced in
recent years by a strong economy and growing marketplace liquidity, although
during 2001 the economy has slowed and marketplace liquidity has tightened. The
markets for most of Tyco Capital's products are characterized by a large number
of competitors,

12

although there continues to be consolidation in the industry. However, with
respect to some products, competition is more concentrated.

Tyco Capital competes primarily on the basis of pricing, terms and
structure. From time to time, Tyco Capital's competitors seek to compete
aggressively on the basis of these factors. Other primary competitive factors
include industry experience, client service and relationships.

The amount of business done with companies in particular industries, such as
the commercial airlines industry, will be affected by the economic conditions in
those industries.

REGULATION

Tyco Capital's operations are subject, in certain instances, to supervision
and regulation by state, federal and various foreign governmental authorities
and may be subject to various laws and judicial and administrative decisions
imposing various requirements and restrictions, which, among other things,
(i) regulate credit granting activities, including establishing licensing
requirements, if any, in applicable jurisdictions, (ii) establish maximum
interest rates, finance charges and other charges, (iii) regulate customers'
insurance coverages, (iv) require disclosures to customers, (v) govern secured
transactions, (vi) set collection, foreclosure, repossession and claims handling
procedures and other trade practices, (vii) prohibit discrimination in the
extension of credit and administration of loans, and (viii) regulate the use and
reporting of information related to a borrower's credit experience. In addition
to the foregoing, CIT Online Bank, a Utah industrial loan corporation wholly
owned by Tyco Capital, is subject to regulation and examination by the Federal
Deposit Insurance Corporation and the Utah Department of Financial Institutions.

BACKLOG

At September 30, 2001, we had a backlog of unfilled orders of
$10,999.1 million, compared to a backlog of $10,418.2 million as of
September 30, 2000. We expect that approximately 76% of our backlog at
September 30, 2001 will be filled during Fiscal 2002. Backlog by reportable
industry segment is as follows ($ in millions):

Backlog for Fire and Security Services includes recurring "revenue in
force," which represents one year's fees for security monitoring and maintenance
services under contract. The amount of backlog as of September 30, 2000 has been
restated to include recurring revenue in force at that date of
$2,203.4 million. The amount of recurring revenue in force at September 30, 2001
is $3,099.6 million. Within the Fire and Security Services segment, backlog
increased due to the following: the deferral of $1,453.5 million of net revenue
as a result of the adoption of SEC Staff Accounting Bulleting No. 101
("SAB 101"), an increase in services contracts of the security business, an
increase in contract bookings at Tyco Infrastructure and, to a lesser extent,
the effect of acquisitions.

Within the Electronics segment, backlog decreased due to the cancellation
and/or delay of orders by customers in certain end-markets, such as the computer
and consumer electronics and communications industries. The decrease in backlog
within the Telecommunications segment reflects

13

generally the downturn in the telecommunications industry and specifically a
decrease in third-party contracts for undersea communications systems, partially
offset by contracts signed for capacity sales on the TGN. In addition, a
$710.5 million contract previously booked was removed from backlog pending
customer financing. The increase in backlog in Healthcare and Specialty Products
is due to the deferral of $71.6 million of net revenue as a result of the
adoption of SAB 101. Backlog in the Healthcare and Specialty Products segment
represents unfilled orders which, in the nature of the business, are normally
shipped shortly after purchase orders are received. We do not view backlog in
the healthcare industry to be a significant indicator of the level of future
sales activity.

PROPERTIES

Our operations are conducted in facilities throughout the world aggregating
approximately 89.5 million square feet of floor space, of which approximately
49.6 million square feet are owned and approximately 39.9 million square feet
are leased. These facilities house manufacturing, distribution and warehousing
operations, as well as sales and marketing, engineering and administrative
offices.

The Electronics segment has manufacturing facilities in North America,
Central and South America, Europe, Asia and Australia. TyCom has manufacturing
and storage facilities in the United States, St. Croix, the United Kingdom,
Curacao, Guam and Spain. The groups occupy approximately 48.0 million square
feet, of which 30.3 million square feet are owned and 17.7 million square feet
are leased.

Within the Fire and Security Services segment, the fire protection
contracting and service business operates through a network of offices located
in North America, Central America, South America, Europe, the Middle East and
Asia-Pacific regions. Fire protection components are manufactured at locations
in North America, the United Kingdom, Germany, Australia, New Zealand and South
Korea. The electronic security services business operates through a network of
monitoring centers and sales and service offices and other properties in North
America, Europe, the Asia-Pacific region, Latin America and South Africa. The
environmental services business operates through a network of offices throughout
North America. The Fire and Security Services segment occupies approximately
10.7 million square feet, of which 2.7 million square feet are owned and
8.0 million square feet are leased.

The Healthcare and Specialty Products segment has manufacturing facilities
in North America, Europe and Asia. The group occupies approximately
21.3 million square feet, of which 13.2 million square feet are owned and
8.1 million square feet are leased.

Tyco Capital conducts its operations in the United States, Canada, Europe,
Latin America, Australia and the Asia-Pacific region. Tyco Capital occupies
approximately 2.7 million square feet of office space, substantially all of
which is leased.

In the opinion of management, our properties and equipment generally are in
good operating condition and are adequate for our present needs. We do not
anticipate difficulty in renewing existing leases as they expire or in finding
alternative facilities. See Note 22 to Consolidated Financial Statements for a
description of our rental obligations.

14

RESEARCH AND DEVELOPMENT

The amounts expended for Tyco-sponsored research and development during
Fiscal 2001, Fiscal 2000, and Fiscal 1999 were $572.0 million, $527.5 million
and $450.5 million, respectively. Customer-funded research and development
expenditures were $40.4 million, $18.6 million and $4.6 million, respectively.

Approximately 5,600 full-time scientists, engineers and other technical
personnel are engaged in our product research and development activities.

Research activity at Tyco Electronics focuses specifically on new product
development and a continuous expansion of technical capabilities. Tyco
Healthcare focuses on technologies to complement existing product lines and
applying expertise to refine and successfully commercialize such products and
technologies and on acquiring rights to new products. Research activity in the
Fire and Security Services segment is related to improvements in hydraulic
design which controls the motion of fluids, resulting in new sprinkler devices
and flow control products.

RAW MATERIALS

We are one of the largest buyers of steel and plastic resin in the United
States. We are also large buyers of copper, brass, plastic, gold, polyethylene
resin and film, polypropylene, electronic components, chemicals and additives,
thin and flexible copper clad materials, paper, ink, foil, adhesives, cloth,
wax, pulp and cotton. Certain of the components used in the Fire Protection
business, principally certain valves and fittings, are purchased for
installation in fire protection systems or for distribution. Our electronic
security systems are purchased from suppliers and are manufactured to our
specification. Materials are purchased from a large number of independent
sources around the world. There have been no shortages in materials which have
had a material adverse effect on our businesses.

PATENTS AND TRADEMARKS

We own a portfolio of patents, which principally relate to electrical and
electronic products, healthcare and specialty products, fire protection devices,
electronic security systems, flow control products, pipe and tubing manufacture,
and cable manufacture. We also own a portfolio of trademarks and are a licensee
under various patents. Although these have been of value and are expected to
continue to be of value in the future, in the opinion of management the loss of
any single patent or group of patents would not materially affect the conduct of
the business in any of our segments. The patents and licenses have remaining
lives of from one to twenty years.

EMPLOYEES

Tyco employed approximately 242,500 people at September 30, 2001, of which
approximately 108,700 are employed in the United States and 133,800 are outside
the United States. We have collective bargaining agreements with labor unions
covering approximately 54,400 employees at certain of our North American,
European and Asia-Pacific businesses. We believe that our relations with the
labor unions and with our employees are generally satisfactory. In April 1994,
following lengthy negotiations, contracts between our Grinnell subsidiary and a
number of local unions affiliated with the United Association of Plumbers and
Pipefitters were not renewed. Employees in those locations, representing
64 percent of Grinnell Fire Protection's North American union employees at the
time, went on strike. The strike ended in January 2001. Grinnell has reinstated
relevant terms of the expired collective bargaining agreement and has resumed
negotiations with the local unions over a new agreement. Grinnell is currently
participating in a proceeding to determine what payments are necessary to
compensate certain employees for losses they may have suffered as a result of
changes in their wages and benefits that Grinnell implemented in 1994. The
action has not had, and is not expected to have, any material adverse effect on
our business or results of operations.

15

ENVIRONMENTAL MATTERS

We make a substantial effort to operate our facilities in compliance with
laws relating to the protection of the environment. Compliance has not had and
is not expected to have a material adverse effect upon our capital expenditures,
earnings or competitive position.

We believe that, consistent with applicable laws and regulations, we
exercise due care and take appropriate precautions in the management of wastes.
We have received notification from the United States Environmental Protection
Agency, and from certain state environmental agencies, that conditions at a
number of sites where we and others disposed of hazardous wastes require cleanup
and other possible remedial action.

We also have a number of projects underway at several of our manufacturing
facilities in order to comply with environmental laws. These projects relate to
a variety of activities, including solvent and metal contamination clean up and
oil spill equipment upgrades and replacement. These projects, some of which are
voluntary and some of which are required under applicable law, involve both
remediation expenses and capital improvements. In addition, we remain
responsible for certain environmental issues at manufacturing locations sold by
us.

The ultimate cost of site cleanup is difficult to predict given the
uncertainties regarding the extent of the required cleanup, the interpretation
of applicable laws and regulations and alternative cleanup methods. Based upon
our experience with the foregoing environmental matters, we have concluded that
there is at least a reasonable possibility that we will incur remedial costs in
the range of $186.0 million to $492.1 million. As of September 30, 2001, we
concluded that the best estimate within this range is $268.5 million, of which
$206.2 million is included in accrued expenses and other current liabilities and
$62.3 million is included in other long-term liabilities on the Consolidated
Balance Sheet. The increase in the environmental remediation reserve at
September 30, 2001 compared to the $68.3 million reserve at September 30, 2000
is due to the acquisition of Mallinckrodt. In view of our financial position and
reserves for environmental matters of $268.5 million, we have concluded that any
potential payment of such estimated amounts will not have a material adverse
effect on our consolidated financial position, results of operations or
liquidity. See Item 3. "Business--Legal Proceedings" for a description of a
pending legal proceeding regarding alleged Clean Water Act violations involving
Tyco Printed Circuit Group.

ITEM 2. PROPERTIES

See Item 1. "Business--Properties" for information relating to the Company's
owned and leased properties.

ITEM 3. LEGAL PROCEEDINGS

SECURITIES LITIGATION

Beginning on December 9, 1999, Tyco and two Tyco executive officers were
named as defendants in thirty-eight substantially identical class action
lawsuits that were filed in various Federal courts seeking damages on account of
alleged violations of the securities laws in connection with Tyco's financial
disclosures concerning certain mergers and acquisitions and Tyco's accounting
therefor. All of the cases have been consolidated for pretrial purposes before
the United States District Court for the District of New Hampshire.

The Court has selected lead plaintiffs. A Second Amended Class Action
Complaint and Jury Trial Demand was filed on November 2, 2000, purporting to
name two additional Tyco officers and a Tyco Director as defendants. In the
Second Amended Complaint, plaintiffs seek certification of a class of persons
who purchased or acquired Tyco securities during the period from October 1, 1998
through December 8, 1999, as well as certification of certain subclasses. The
plaintiffs seek money damages and/or rescission. Tyco and the other defendants
have moved to dismiss the Second Amended Complaint, but the Court has not as yet
ruled on the motion.

16

TYCOM (US) INC./GLOBAL CROSSING ARBITRATION AND LITIGATION

TyCom (US) Inc. (formerly known as Tyco Submarine Systems Ltd.), a
subsidiary of Tyco, was named as the respondent in an arbitration proceeding
that was commenced on May 22, 2000, by Atlantic Crossing Ltd., GT Hauling Corp.,
GT U.K. Ltd., Global Telesystems GmbH, and GT Netherlands BV (all subsidiaries
of Global Crossing Ltd.) under the international rules of the American
Arbitration Association, asserting claims for breach of duty of loyalty and
breach of three agreements between the parties relating to the Atlantic
Crossing-1 subsea cable system; TyCom (US) Inc. asserted counterclaims for
breach of those agreements. TyCom (US) Inc. was also named as the defendant in
an action brought in the United States District Court for the Southern District
of New York on May 22, 2000, by Global Crossing Ltd. and its subsidiary South
American Crossing (Subsea) Ltd., alleging that in connection with the
development of a South American subsea cable system to be owned by South
American Crossing (Subsea) Ltd., TyCom (US) Inc. misappropriated trade secrets,
committed fraud, breached several alleged agreements and defamed South American
Crossing (Subsea) Ltd.; TyCom (US) Inc. asserted counterclaims for breach of
contract. On October 4, 2001, the parties to the arbitration and the litigation
entered into a settlement agreement, pursuant to which the arbitration
proceeding was terminated with prejudice by Stipulation of Termination dated
October 5, 2001, and the litigation was terminated with prejudice by Stipulation
of Dismissal dated October 5, 2001.

TYCO PRINTED CIRCUIT GROUP

In June 2001, Tyco Printed Circuit Group ("TPCG"), a Tyco subsidiary in the
Electronics segment, was advised by the office of the U.S. Attorney for the
District of Connecticut that TPCG is the target of a federal grand jury
investigation concerning alleged Clean Water Act violations at one or more of
TPCG's Connecticut manufacturing plants. TPCG also understands that employees at
one of these plants are subjects of the investigation, and that the alleged
violations relate to violations of applicable permits. Tyco management does not
believe that the investigation will have a material impact on the financial
condition of Tyco and its subsidiaries, taken as a whole. TPCG is cooperating
fully in the investigation.

See also the discussions under Item 1. "Business--Environmental Matters."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON SHARES AND RELATED SECURITY HOLDER
MATTERS

The number of registered holders of Tyco's common shares at November 7, 2001
was 45,854.

Tyco common shares are listed and traded on the New York Stock Exchange
("NYSE") and the Bermuda Stock Exchange under the symbol "TYC," and on the
London Stock Exchange under the symbol "TYI." The following table sets forth the
high and low sales prices per Tyco common share as reported by the NYSE, and the
dividends paid on Tyco common shares, for the quarterly periods presented below.
The price and dividends for Tyco common shares have been restated to reflect a
two-for-one stock split on October 21, 1999 in the form of a 100% stock
dividend.

17

PART II

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial information
of Tyco as at and for the fiscal years ended September 30, 2001, 2000, 1999 and
1998 and the nine-month fiscal period ended September 30, 1997. This selected
financial information should be read in conjunction with Tyco's Consolidated
Financial Statements and related notes. The selected financial data reflect the
combined results of operations and financial position of Tyco, AMP Incorporated,
United States Surgical Corporation, Former Tyco (as defined in Note 7 below),
Keystone International, Inc. and Inbrand Corporation restated for all periods
presented pursuant to the pooling of interests method of accounting. See
Notes 1 and 3 to the Consolidated Financial Statements.

- ------------------------------
(1) In fiscal 2001, we changed our revenue recognition accounting policy to
conform with the requirements of Staff Accounting Bulletin No. 101 issued by
the Staff of the Securities and Exchange Commission, as more fully described
in Note 18 to the Consolidated Financial Statements.

(2) Income from continuing operations in the fiscal year ended September 30,
2001 includes a net charge of $418.5 million, of which $184.9 million is
included in cost of revenue, for restructuring and other non-recurring
charges, a charge for the write-off of in-process research and development
of $184.3 million and charges of $120.1 million for the impairment of
long-lived assets. See Notes 2, 16 and 21 to the Consolidated Financial
Statements. Income from continuing operations for the fiscal year ended
September 30, 2001 also includes a net gain on sale of businesses and
investments of $276.6 million and a net gain on the sale of common shares of
a subsidiary of $64.1 million.

(3) Income from continuing operations in the fiscal year ended September 30,
2000 includes a net charge of $176.3 million, of which $1.0 million is
included in cost of revenue, for restructuring and other non-recurring
charges, and charges of $99.0 million for the impairment of long-lived
assets. See Notes 16 and 21 to the Consolidated Financial Statements. Income
from continuing operations for the fiscal year ended September 30, 2000 also
includes a one-time pre-tax gain of $1,760.0 million related to the sale by
a subsidiary of its common shares. See Note 20 to the Consolidated Financial
Statements.

(4) Income from continuing operations in the fiscal year ended September 30,
1999 is net of charges of $1,035.2 million for merger, restructuring and
other non-recurring charges, of which $106.4 million is included in cost of
revenue, and charges of $507.5 million for the impairment of long-lived
assets related to the mergers with U.S. Surgical and AMP and AMP's profit
improvement plan. See Notes 16 and 21 to the Consolidated Financial
Statements.

(5) Income from continuing operations in the fiscal year ended September 30,
1998 is net of charges of $80.5 million related primarily to costs to exit
certain businesses in U.S. Surgical's operations and restructuring charges
of $12.0 million related to the continuing operations of U.S. Surgical. In
addition, AMP recorded restructuring charges of $185.8 million in connection
with its profit improvement plan and a credit of $21.4 million to
restructuring charges representing a revision of estimates related to its
1996 restructuring activities.

(6) In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Accordingly, the nine-month transition period ended
September 30, 1997 is presented.

18

(7) In July 1997, a wholly-owned subsidiary of what was formerly called ADT
Limited ("ADT") merged with Tyco International Ltd., a Massachusetts
Corporation at the time ("Former Tyco"). Upon consummation of the merger,
ADT (the continuing public company) changed its name to Tyco International
Ltd. Former Tyco became a wholly-owned subsidiary of the Company and changed
its name to Tyco International (US) Inc. ("Tyco US"). Income from continuing
operations in the nine months ended September 30, 1997 is net of charges
related to merger, restructuring and other non-recurring costs of
$917.8 million and impairment of long-lived assets of $148.4 million related
primarily to the mergers and integration of ADT, Former Tyco, Keystone, and
Inbrand, and charges of $24.3 million for litigation and other related costs
and $5.8 million for restructuring charges in U.S. Surgical's operations.
The results for the nine months ended September 30, 1997 also include a
charge of $361.0 million for the write-off of purchased in-process research
and development related to the acquisition of the submarine systems business
of AT&T Corp.

(8) Per share amounts have been retroactively restated to give effect to the
mergers with Former Tyco, Keystone, Inbrand, U.S. Surgical and AMP; a
0.48133 reverse stock split (1.92532 after giving effect to the subsequent
stock splits) effected on July 2, 1997; and two-for-one stock splits on
October 22, 1997 and October 21, 1999, both of which were effected in the
form of a stock dividend.

(9) Tyco has paid a quarterly cash dividend of $0.0125 per common share since
July 2, 1997, the date of the Former Tyco/ADT merger. Prior to the merger
with ADT, Former Tyco had paid a quarterly cash dividend of $0.0125 per
share of common stock since January 1992. ADT had not paid any dividends on
its common shares since 1992. U.S. Surgical paid quarterly dividends of
$0.04 per share in the year ended September 30, 1998 and the nine months
ended September 30, 1997. AMP paid dividends of $0.27 per share in the first
two quarters of the year ended September 30, 1999, $0.26 per share in the
first quarter and $0.27 per share in the last three quarters of the year
ended September 30, 1998, $0.26 per share in each of the three quarters of
the nine months ended September 30, 1997. The payment of dividends by Tyco
in the future will depend on business conditions, Tyco's financial condition
and earnings and other factors.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

See Management's Discussion and Analysis of Financial Condition and Results
of Operations which appears on pages 91 to 113 of this Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Management's Discussion and Analysis of Financial Condition and Results
of Operations which appears on pages 91 to 113 of this Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements and schedule are filed as
part of this Annual Report:

Financial Statements:

Report of Independent Accountants

Consolidated Balance Sheets--September 30, 2001 and 2000

Consolidated Statements of Operations for the fiscal years
ended September 30, 2001, 2000 and 1999.

Consolidated Statements of Shareholders' Equity for the
fiscal years ended September 30, 2001, 2000 and 1999

Consolidated Statements of Cash Flows for the fiscal years
ended September 30, 2001, 2000 and 1999

Notes to Consolidated Financial Statements

Financial Statement Schedule:

Schedule II--Valuation and Qualifying Accounts

All other financial statements and schedules have been omitted since the
information required to be submitted has been included in the consolidated
financial statements and related notes or because they are either not applicable
or not required under the rules of Regulation S-X.

See Notes to Consolidated Financial Statements for Summarized Quarterly
Financial Data (unaudited).

19

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning the Directors and Executive Officers of the
Registrant is hereby incorporated by reference to the Registrant's definitive
proxy statement which will be filed with the Commission within 120 days after
the close of the fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation is hereby incorporated by
reference to the Registrant's definitive proxy statement which will be filed
with the Commission within 120 days after the close of the fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning security ownership of certain beneficial owners and
management is hereby incorporated by reference to the Registrant's definitive
proxy statement which will be filed with the Commission within 120 days after
the close of the fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions is
hereby incorporated by reference to the Registrant's definitive proxy statement
which will be filed with the Commission within 120 days after the close of the
fiscal year.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) and (2) Financial Statements and Schedules--see Item 8.

(b) Reports on Form 8-K

Current Report on Form 8-K filed on July 25, 2001 announcing Tyco's results for
the third quarter of Fiscal 2001.

Current Report on Form 8-K filed on August 3, 2001 announcing the proposed
acquisition of Sensormatic Electronics Corporation.

Current Report on Form 8-K filed on August 16, 2001 to include, as an exhibit,
the unaudited Consolidated Financial Statements of The CIT Group, Inc. and
subsidiaries as of June 30, 2001 and December 31, 2000 and for the six months
ended June 30, 2001 and 2000, and to include, as an exhibit, Tyco and CIT
unaudited pro forma combined financial information for the nine months ended
June 30, 2001 and for the year ended September 30, 2000.

(c) Exhibits

2.1 Agreement and Plan of Merger, dated June 28, 2000, by and
among Tyco Acquisition Corp. VI (NV), EVM Merger Corp. and
Mallinckrodt Inc. (Incorporated by reference to the
Registrant's Form S-4 filed July 12, 2000).
2.2 Agreement for the Purchase and Sale of Assets, dated
November 13, 2000, by and between Lucent Technologies and
Tyco Group S.a.r.L. (Incorporated by reference to an Exhibit
to the Registrant's Annual Report on Form 10-K filed
December 21, 2000).

20

2.3 Amendment No. 1 dated December 29, 2000 to Agreement for the
Purchase and Sale of Assets, dated November 13, 2000, by and
between Lucent Technologies and Tyco Group S.a.r.L. (Filed
herewith).
2.4 Agreement and Plan of Merger dated March 12, 2001, by and
between Tyco Acquisition Corp. XIX (NV) and The CIT Group,
Inc., including guarantee of Tyco International Ltd.
(Incorporated by reference to the Registrant's Form S-4
filed March 29, 2001).
2.5 Agreement and Plan of Merger dated May 29, 2001, by and
between Tyco Acquisition Corp. XXII (NV) and C.R.
Bard, Inc., including guarantee of Tyco International Ltd.
(Incorporated by reference to the Registrant's Form S-4
filed June 15, 2001).
2.6 Agreement and Plan of Merger dated August 3, 2001 by and
between Tyco Acquisition Corp. XXIV (NV) and Sensormatic
Electronic Corporation, including guarantee of Tyco
International Ltd. (Incorporated by reference to the
Registrant's Prospectus filed August 23, 2001).
2.7 Agreement and Plan of Amalgamation dated October 18, 2001,
by and between TGN Holdings, Ltd. and TyCom Ltd., including
guarantee of Tyco International Ltd. (Incorporated by
reference to the Registrant's Form S-4 filed October 23,
2001).
3.1 Memorandum of Association (as altered) (Incorporating all
amendments to May 26, 1992). (Incorporated by reference to
an Exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992).
3.2 Certificate of Incorporation on change of name dated July 2,
1997. (Incorporated by reference to an Exhibit to the
Registrant's Current Report dated July 2, 1997 on Form 8-K
filed July 10, 1997).
3.3 Bye-Laws (Incorporating all amendments to March 27, 2001).
(Incorporated by reference to an Exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001 filed May 11, 2001).
4.1 Form of Indenture, dated as of June 9, 1998, among Tyco
International Group S.A. (TIG), Tyco and The Bank of New
York, as trustee (Incorporated by reference to an Exhibit to
the Registrant's and TIG's Co-Registration Statement on Form
S-3 filed June 9, 1998).
4.2 Form of Indenture dated as of September 24, 1998 by and
between Tyco Capital Corporation (formerly known as The CIT
Group, Inc.) and The Bank of New York, as trustee, for the
issuance of unsecured and unsubordinated debt securities
(Incorporated by reference to an Exhibit to CIT's Form S-3
filed September 24, 1998).
4.3 Form of Indenture dated as of September 24, 1998 by and
between Tyco Capital Corporation (formerly known as The CIT
Group, Inc.) and Bank One Trust Company, N.A., as trustee,
for the issuance of unsecured and unsubordinated debt
securities (Incorporated by reference to an Exhibit to CIT's
Form S-3 filed September 24, 1998).
4.4 Form of Indenture dated as of September 24, 1998 by and
between Tyco Capital Corporation (formerly known as The CIT
Group, Inc.) and The Bank of New York, as trustee, for the
issuance of unsecured and senior subordinated debt
securities (Incorporated by reference to an Exhibit to CIT's
Form S-3 filed September 24, 1998).
4.5 Certain instruments defining the rights of holders of TIG's
and TIL's long-term debt, none of which authorize a total
amount of indebtedness in excess of 10% of the total assets
of TIL and its subsidiaries on a consolidated basis, have
not been filed in exhibits. TIL agrees to furnish a copy of
these agreements to the Commission upon request.
4.6 Indenture by and among TIG, Tyco, and State Street Bank and
Trust Company, as trustee, dated as of February 12, 2001
relating to Zero Coupon Convertible Debentures due 2021.
(Incorporated by reference to an Exhibit to the Registrants'
and TIG's Co-Registration on Form S-3 filed March 16, 2001).
4.7 364-Day Credit Agreement dated as of February 7, 2001 among
TIG, Tyco, the banks named therein and The Chase Manhattan
Bank, as Agent (Incorporated by reference to an Exhibit to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001 filed May 11, 2001).

21

4.8 Amendment No. 1 dated May 25, 2001 among TIG, Tyco, the
banks named therein and The Chase Manhattan Bank, as Agent,
relating to the 364-Day Credit Agreement dated February 7,
2001 (Filed herewith).
4.9 Indenture dated November 17, 2000 between Tyco and State
Street Bank and Trust Company, as trustee relating to Zero
Coupon Convertible Debentures due 2020. (Incorporated by
reference to the Registrant's Form S-3 filed December 8,
2000).
4.10 Five-year Credit Agreement dated as of February 7, 2001
among TIG, Tyco, the Banks named therein and The Chase
Manhattan Bank, as Agent (Incorporated by reference to an
Exhibit to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2001 filed May 11, 2001).
4.11 Amendment No. 1 dated May 25, 2001 among TIG, Tyco, the
banks named therein and The Chase Manhattan Bank, as Agent,
relating to the Five-year Credit Agreement dated
February 7, 2001 (Filed herewith).
10.1 The Tyco International Ltd. Long Term Incentive Plan
(formerly known as the ADT 1993 Long-Term Incentive Plan)
(as amended May 12, 1999) (Incorporated by reference to the
Registrant's Form S-8 filed on June 10, 1999).*
10.2 1981 Key Employee Loan Program (Incorporated by reference to
Former Tyco's Form 10-K for the year ended May 31, 1982).*
10.3 1983 Restricted Stock Ownership Plan for Key Employees
(Incorporated by reference to Former Tyco Shareholders'
Proxy Statement for Annual Meeting of Shareholders on
October 18, 1983).*
10.4 1983 Key Employee Loan Program, as amended December 9, 1993
(Incorporated by reference to Former Tyco's Form 10-K for
the year ended June 30, 1994).*
10.5 1994 Restricted Stock Ownership Plan for Key Employees
(Incorporated by reference to the Registrant's Form S-8
filed on December 21, 1999).*
10.6 Tyco International Ltd. Supplemental Executive Retirement
Plan (Incorporated by reference to Former Tyco's Form 10-K
for the year ended June 30, 1995).*
10.7 The Tyco International Ltd. Long Term Incentive Plan II
(Incorporated by reference to the Registrant's Form S-8
filed March 25, 1999).*
10.8 Retention Agreement for L. Dennis Kozlowski dated
January 22, 2001 and Amendment thereto dated August 1, 2001
(Filed herewith).*
10.9 Retention Agreement for Mark H. Swartz dated January 22,
2001 and Amendment thereto dated August 1, 2001 (Filed
herewith).*
10.10 Retention Agreement for Albert R. Gamper, Jr. dated
March 12, 2001 (Filed herewith).*
21.1 Subsidiaries of the registrant (Filed herewith).
23.1 Consent of PricewaterhouseCoopers (Filed herewith).

- ------------------------

* Management contract or compensatory plan.

22

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

TYCO INTERNATIONAL LTD.

By: /s/ MARK H. SWARTZ
-----------------------------------------
Mark H. Swartz
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)

Date: December 28, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on December 28, 2001 in
the capacities indicated below.

24

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Shareholders of Tyco International Ltd.

In our opinion, based upon our audits, the accompanying consolidated balance
sheets and the related consolidated statements of operations, of shareholders'
equity and of cash flows present fairly, in all material respects, the financial
position of Tyco International Ltd. and its subsidiaries at September 30, 2001
and 2000, and the results of their operations and their cash flows for each of
the three years in the period ended September 30, 2001, in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the accompanying financial statement schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As described in Note 18, the Company changed its method of revenue
recognition and changed its method of accounting for derivative instruments and
hedging activities.

PRICEWATERHOUSECOOPERS

Hamilton, Bermuda
October 18, 2001, except as to Note 31
which is as of December 18, 2001

25

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)

See Notes to Consolidated Financial Statements
and, in particular, see Note 1 for definitions of Tyco Industrial and Tyco
Capital.

26

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)

See Notes to Consolidated Financial Statements
and, in particular, see Note 1 for definitions of Tyco Industrial and Tyco
Capital.

27

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN MILLIONS, EXCEPT PER SHARE DATA)

See Notes to Consolidated Financial Statements.

28

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)