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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, 1999
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 Number)
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)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON SHARES, PAR VALUE $0.20 NEW YORK STOCK EXCHANGE
SERIES A FIRST PREFERENCE SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
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. /X/.
The aggregate market value of voting common shares held by nonaffiliates of
registrant was $63,297,592,505 as of December 3, 1999.
The number of common shares outstanding as of December 3, 1999 was
1,700,010,963.
DOCUMENTS INCORPORATED BY REFERENCE
See pages 20 to 24 for the exhibit index.
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* The executive offices of registrant's principal United States subsidiary, Tyco
International (US) Inc., are located at One Tyco Park, Exeter, New Hampshire
03833. The telephone number there is (603) 778-9700.
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PART I
ITEM 1. BUSINESS
INTRODUCTION
Tyco International Ltd. ("Tyco" or the "Company") is a diversified
manufacturing and service company that, through its subsidiaries:
- designs, manufactures and distributes electrical and electronic components
and designs, manufactures, installs and services undersea cable
communication systems;
- designs, manufactures and distributes disposable medical supplies and
other specialty products, and conducts auto redistribution services;
- designs, manufactures, installs and services fire detection and
suppression systems and installs, monitors and maintains electronic
security systems; and
- designs, manufactures and distributes flow control products.
See Notes 19 and 20 to the Consolidated Financial Statements for certain
segment and geographic financial data relating to the Company's business.
Tyco's strategy is to be the low-cost, high quality producer and provider in
each of its markets. It promotes its leadership position by investing in
existing businesses, developing new markets and acquiring complementary
businesses and products. Combining the strengths of its existing operations and
its business acquisitions, Tyco seeks to enhance shareholder value through
increased earnings per share and strong cash flows.
I. TELECOMMUNICATIONS AND ELECTRONICS
The Telecommunications and Electronics segment consists of the following:
- Tyco Electronics, including AMP Incorporated ("AMP"), which designs and
manufactures electrical connectors, interconnection systems, touch screens
and wireless systems, and Raychem Corporation ("Raychem"), which develops
and manufactures high-performance electronic components;
- Tyco Submarine Systems Ltd. ("TSSL"), which designs, manufactures,
installs and services undersea communications cable systems; and
- Tyco Printed Circuit Group ("TPCG"), which designs and manufactures
multi-layer printed circuit boards, backplane assemblies and similar
components.
TYCO ELECTRONICS
The principal operating company of this division is AMP, which merged with
the Company on April 2, 1999. AMP designs, manufactures and markets a broad
range of electronic, electrical and electro-optic connection devices and an
expanding number of interconnection systems and connector-intensive assemblies,
as well as wireless products including semi-conductors, radar sensors and Global
Positioning Satellite systems. AMP's 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 voice,
data and video communications converge. AMP 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 machines.
AMP's customers include original equipment manufacturers (OEMs) and their
subcontractors, utilities, government agencies, distributors, value-added
resellers, and customers who install, maintain and repair equipment. These
customers are found in the automotive, power technology, personal computer,
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communications, and consumer industrial industries. AMP serves over 90,000
customers located in over 143 countries, covering many diverse markets.
AMP is a global marketing, sales, engineering and manufacturing
interconnection systems company with a strong local presence in the geographical
areas in which it operates, such as the Americas, the Asia-Pacific region,
Europe and the Middle East.
The acquisition of Raychem on August 12, 1999 significantly expanded the
product line and complemented existing products and services offered by AMP.
Raychem develops, manufactures and markets a variety of high-performance
products for electronic OEMs and telecommunications, energy and industrial
applications. Raychem designs, manufactures and distributes products such as
circuit protection devices, heat-shrinkable tubing and molded parts, wire and
cable, and computer touchscreens. In addition, Raychem designs and manufactures
fiber optic and copper cable accessories, energy cable accessories and
heat-tracing products and provides design, engineering and installation
services.
On November 23, 1999, the Company consummated its acquisition of Siemens
Electromechanical Components GmbH & Co. KG ("Siemens EC") from Siemens AG.
Siemens EC is the world market leader for the manufacture and sale of relays and
is one of the world's leading providers of electro-mechanical components to the
communications, automotive, consumer and general industry sectors.
TYCO SUBMARINE SYSTEMS LTD.
TSSL, which includes the Company's Simplex Technologies business and the
submarine systems business acquired from AT&T Corp. in July 1997, is the world's
only fully-integrated source for the design, engineering, manufacturing,
installation and servicing of undersea cable communications systems. TSSL
designs and builds both repeatered and non-repeatered fiber optic cable systems.
Repeatered cable systems, which use Dense Wave Division Multiplexing, can
provide 160 gigabits per second per fiber pair of capacity over 10,000
kilometers. Non-repeatered systems, which allow for even greater circuit
capacity and reduced transmission costs, support short haul systems of several
hundred kilometers. TSSL has designed, manufactured and installed approximately
350,000 kilometers of undersea optical cable.
TSSL includes a world class research and development facility populated by
acclaimed engineers and state of the art equipment to facilitate forward looking
design work. TSSL operates one of the world's largest fleet of ships deployed
worldwide to design, maintain, install and service undersea fiber optic
transmission systems. TSSL also uses a variety of other undersea tools,
including robotic vehicles for undersea cable burial and retrieval operations.
Simplex Technologies is the primary supplier of cable and cable assemblies
to TSSL. It also manufactures underwater electrical power cables and
electro-mechanical cables for unique field operations. The Company's Rochester
business manufactures wirelines, electro-optical products, subsea products, and
sizes and draws high precision, high tensile steel wire for Simplex consumption.
TSSL competes on a worldwide basis primarily against two other entities:
Alcatel-Alsthom, headquartered in France, and KDD-SCS, located in Japan.
Alcatel, like TSSL, is vertically integrated and produces its own cable, whereas
KDD utilizes a Japanese cable manufacturer.
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. Printed
circuit boards are used in the electronics industry to mount and interconnect
components to create electronic systems. They are categorized by the number of
layers and can be single-sided, double-sided or multi-layer. In general, single
and double-sided boards are less advanced. Multi-layer boards provide greater
interconnection density, while decreasing the number of separate printed circuit
boards that are required to accommodate powerful and sophisticated
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components. Backplane assemblies are comprised of printed circuit boards,
connectors and other electronic components, and they serve as an electrical and
mechanical interconnect device.
TPCG manufactures double-sided and multi-layer boards, including highly
sophisticated, precision tooled, custom laminated boards with layer counts up to
68. TPCG also produces sophisticated flexible-rigid circuit boards 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 also 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. The
Company competes with several other large independent and captive companies that
manufacture printed circuit board products primarily in the United States.
Competition is on the basis of quality, reliability, price and timeliness of
delivery. The Company believes that fewer competitors manufacture the more
complex, high-density multi-layer printed circuit board products.
II. HEALTHCARE AND SPECIALTY PRODUCTS
The principal divisions in the Healthcare and Specialty Products segment are
as follows:
- Tyco Healthcare Group, which manufactures and distributes a wide variety
of disposable medical products, including wound care products, syringes
and needles, sutures and surgical staplers, incontinence products,
electrosurgical instruments and laparoscopic instruments;
- Tyco Plastics and Adhesives, which manufactures flexible plastic
packaging, plastic bags and sheeting, coated and laminated packaging
materials, tapes and adhesives, and plastic garment hangers; and
- ADT Automotive, which is the second largest provider of auto
redistribution services in the United States.
TYCO HEALTHCARE GROUP
The Tyco Healthcare Group consists of four primary business units including
Kendall Healthcare, Tyco Healthcare International, U.S. Surgical and ValleyLab.
Kendall Healthcare, which is comprised of Kendall, Sherwood-Davis & Geck,
Ludlow, Graphic Controls and Confab, manufactures and markets worldwide a broad
range of needles, syringes, electrodes and wound care, specialized paper and
film, vascular therapy, urological care, incontinence care, anaesthetic 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.
The sales force is divided into five groups: vascular therapy products, medical
and surgical products, alternate site markets, Ludlow and Confab.
Kendall Healthcare, which operates throughout the United States, 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
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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, baby diapers and other
related products.
Ludlow, 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. Its operations are organized primarily into three geographic
regions, Europe, Latin America and Asia-Pacific, although the mix of product
lines offered varies from country to country.
On October 1, 1998, Tyco completed its acquisition of United States Surgical
Corporation. U.S. Surgical develops, manufactures and markets a line of surgical
wound closure products and other advanced surgical products to hospitals
throughout the world. Its products include surgical staplers, sutures,
disposable laparoscopic instrumentation and numerous other products in surgical
and medical specialties such as spine surgery, cardiovascular surgery, and
breastcare.
ValleyLab, acquired by U.S. Surgical in 1998, 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.
TYCO PLASTICS AND ADHESIVES
Tyco Plastics and Adhesives consists of Armin Plastics, Carlisle Plastics,
A&E Products, Tyco Adhesives and Ludlow Coated Products.
ARMIN PLASTICS
Armin manufactures polyethylene film and packaging products in a wide range
of size, gauge, construction strength, stretch capacity, clarity and color.
Armin extrudes low density, high density and linear low density polyethylene
film from resin purchased in pellet form, incorporating such additives as
coloring, slip and anti-block chemicals. Armin's products include plastic
supermarket packaging, greenhouse sheeting, shipping covers and liners and a
variety of other packaging configurations for the aerospace, agricultural,
automotive, construction, cosmetics, electronics, food processing, healthcare,
pharmaceutical and shipping industries. Armin also manufactures a number of
other polyethylene products such as reusable plastic pallets, transformer pads
for electric utilities and a large variety of disposable gloves for the
cosmetic, medical, food handling and pharmaceutical industries. Armin generates
the majority of its sales through its own internal sales force and services more
than 6,000 customers in the United States.
Armin competes with a wide range of manufacturers, including some vertically
integrated companies and companies that manufacture polyethylene resins for
their own use. Armin competes in many market segments by emphasizing product
innovation, specialization and customer service.
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CARLISLE PLASTICS
Carlisle is a leading producer of industrial and consumer plastic products,
including trash bags, flexible packaging and sheeting. Carlisle supplies plastic
trash bags to mass merchants, grocery chains, and institutional customers
primarily in North America. Carlisle manufactures Ruffies-Registered Trademark-,
a national brand consumer trash bag, for mass merchants and other retail stores.
Carlisle also provides heavy duty trash can liners for institutional customers,
such as food service distributors, janitorial supply houses, restaurants, hotels
and hospitals.
In the consumer trash bag market, Carlisle competes primarily with two
nationally advertised brands. Carlisle has historically concentrated on mass
merchants as the primary market for its branded Ruffies trash bags, while the
other major national brands are marketed primarily through food retailers.
Film-Gard-Registered Trademark-, Carlisle's leading plastic sheeting
product, is 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.
A&E PRODUCTS
A&E Products sells molded plastic garment hangers to garment manufacturers,
national, regional and local retailers and mass merchants. Garment manufacturers
put their products on A&E Products hangers before shipping to retail outlets.
National retailers purchase customized hanger designs created and manufactured
by A&E Products. Regional and local retailers buy standard A&E Products hanger
lines for retail clothing displays, and A&E Products also supplies mass
merchants with consumer plastic hangers for sale to the general public.
A&E Products operates in a competitive marketplace where success is
dependent upon price, service and quality.
TYCO ADHESIVES
The Tyco Adhesives division manufactures and markets specialty adhesive
products and tapes for industrial applications, including external corrosion
protection tape products for oil, gas and water pipelines. Other industrial
applications include tapes used in the automotive industry for wire harness
wraps, sealing and other purposes, in the aerospace industry, and in the
heating, ventilation and air conditioning (HVAC) industry. 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 Kendall Healthcare and others. Tyco Adhesives' Betham
division develops and markets pressure sensitive adhesives and coatings,
principally for the automotive, medical and specialty markets.
Tyco Adhesives generally markets its pipeline products directly to its
customer base, working with local manufacturers' representatives, international
engineering and construction companies and the owners and operators of pipeline
transportation facilities. Tyco Adhesives sells its other industrial products
either directly to major end users or through diverse distribution channels,
depending upon the industry being supplied.
LUDLOW COATED PRODUCTS
Ludlow Coated Products produces protective packaging and other materials
made of coated or laminated combinations of paper, polyethylene and foil. Coated
packaging materials provide barriers against grease, oil, light, heat, moisture,
oxygen and other contaminants. The division produces structural coated and
laminated products such as plastic coated kraft, linerboard and bleached boards
for rigid urethane insulation panels, automotive components and wallboard
panels. Other product applications
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include packaging for photographic film, frozen foods, health care products,
electrical and metallic components, agricultural chemicals, cement and specialty
resins.
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. There are
various specialized competitors in different markets.
ADT AUTOMOTIVE
ADT Automotive operates a network of 28 large modern auction centers in the
United States, providing an organized wholesale marketplace for the sale and
purchase of used vehicles. A substantial majority of the vehicles sold at ADT
Automotive auctions are passenger cars and light trucks. Other vehicles sold
consist of heavy trucks and industrial vehicles. Sales of vehicles from specific
market sources are held on a regularly scheduled basis and additional
specialized sales are scheduled as necessary. ADT Automotive operates almost
exclusively in the wholesale marketplace and, in general, the public is not
permitted to attend its auctions. It acts solely as an agent in auction
transactions and does not purchase vehicles for its own account.
The principal sources of vehicles for sale at auction are consignments by
new and used vehicle dealers, vehicle manufacturers, corporate owners of
vehicles such as fleet operators, rental companies, leasing companies, banks and
other financial institutions, manufacturers' credit subsidiaries and government
agencies. The vehicles consigned by dealers consist of vehicles of all types and
ages and include vehicles that have been traded in against new car sales.
Vehicles consigned by corporate and financial owners include both repossessed
and off-lease vehicles and, as a result, are normally in the range of one to
four years old. The principal purchasers of vehicles at auction are new and used
vehicle dealers and distributors.
In addition to the auction process, ADT Automotive provides a comprehensive
range of vehicle redistribution services, including transportation,
reconditioning, title transfer assistance, vehicle repossession and fleet
management services. Vehicle reconditioning is carried out on-site and
principally consists of appearance reconditioning and paint and body work to
bring vehicles up to retail ready condition. More extensive body work services
including body panel painting and repair of minor collision damage are also
carried out. Reconditioning services are also provided for vehicles other than
those going through the auction process, principally for fleet owners and
insurance companies.
ADT Automotive competes with two other significant auction chains and a
large number of independently owned local auctions, which are members of the
National Auto Auction Association. Competition is based primarily on price in
relation to the quality and range of services offered to sellers and buyers of
vehicles and ease of accessibility of auction locations.
III. FIRE AND SECURITY SERVICES
The Company, through its subsidiaries, is the largest company in the world
for the following:
- design, installation and servicing of a broad line of fire detection,
prevention and suppression systems;
- providing electronic security installation and monitoring services; and
- manufacture and servicing of fire extinguishers and related products.
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FIRE PROTECTION CONTRACTING AND SERVICES
Operating under several trade names including Grinnell, Wormald, Mather &
Platt, Total Walther, O'Donnell Griffin and Tyco, the Company designs,
fabricates, installs and services automatic fire sprinkler systems, fire alarm
and detection systems, and special hazard suppression systems in buildings and
other installations.
The Company's fire protection contracting and service business in North
America operates through a network of offices in the United States, Canada,
Mexico, Central America and Puerto Rico. The Company also operates worldwide
through a network of offices in the United Kingdom, continental Europe, Saudi
Arabia, United Arab Emirates, Australia, New Zealand, Asia and South America.
The Company installs fire protection systems in both new and existing
structures. Typically, the contracting businesses bid on contracts for fire
protection installation which 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 premiums available to structures with automatic sprinkler
systems. The Company continues to focus on system maintenance and inspection,
which has become a more significant part of the business.
The majority of the fire suppression systems installed by the Company are
water-based. However, the Company is also the world's leading provider of custom
designed special hazard fire 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.
The Company holds exclusive manufacturing and distribution rights in several
regions of the world for INERGEN-Registered Trademark- fire suppression
products. INERGEN is an alternative to the ozone depleting agent known as halon
and consists of a mixture of three inert gases designed to effectively
extinguish fires without polluting the environment, damaging costly equipment or
harming people.
In Australia, New Zealand and Asia, the Company 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
the Company are manufactured by the Company. The Company also has fabrication
plants worldwide that cut, thread and weld pipe, which is then shipped with
other prefabricated components to job sites for installation. The Company has
developed its 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.
The Company's fire protection contracting business employs both non-union
and union employees in North America, Europe and Asia-Pacific. Many of the union
employees are employed on an hourly basis for particular jobs. In North America,
the largest number of union employees is represented by a number of local unions
affiliated with the United Association of Plumbers and Pipefitters ("UA"). In
April 1994, following lengthy negotiations, contracts between the Company's
Grinnell Corporation ("Grinnell") subsidiary and a number of locals of the UA
were not renewed. Employees in those locations, representing 64 percent of those
employees represented by the UA unions, went on strike. Grinnell has continued
to operate with former union members who have crossed over and with replacement
workers. The labor action has not had, and is not expected to have, any material
adverse effect on the Company's business or results of operations.
Generally, competition in the fire protection business varies by geographic
location. In North America, the Company competes with hundreds of smaller
contractors on a regional or local basis for the
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installation of fire suppression and fire alarm and detection systems. Many of
the regional and local competitors employ non-union labor. In Europe, the
Company competes with many regional or local contractors on a country by country
basis. In Australia, New Zealand and Asia, the Company competes with a few large
fire protection contractors as well as with many smaller regional or local
companies. The Company competes for fire protection contracts primarily on the
basis of price, service and quality.
ELECTRONIC SECURITY SERVICES
The Company provides electronic security services principally under the ADT
trade name and also under other trade names including Alarmguard, Thorn
Security, Holmes Protection, CIPE, Zettler, Sonitrol, and Armourguard. Services
are provided in the United States, Canada, the United Kingdom, Spain, France,
Belgium, Greece, South Korea, The Netherlands, Germany, The Republic of Ireland,
Singapore, Hong Kong, New Zealand and Australia.
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 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.
The Company provides electronic security services to both commercial and
residential customers. 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. Residential electronic security services are provided primarily in
North America. 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.
The Company's electronic security systems and products are tailored to
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 the Company's monitoring
centers. In either case, the Company usually provides support and maintenance
through service contracts. It has been the Company's 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 the
Company or by the customer. The Company usually retains ownership of standard
residential systems, but more sophisticated residential systems are usually
purchased by the customer.
The Company markets its electronic security services to commercial and
residential customers through a direct sales force and an authorized dealer
network. Commercial customers which have multiple locations in North America are
serviced by a separate national accounts sales force. The Company also utilizes
advertising, telemarketing and direct mail to market its services.
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. The Company also competes
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with several national companies and several thousand regional and local
companies in the United Kingdom, continental Europe, Asia, New Zealand and
Australia. Competition is based primarily on price in relation to quality of
service. The Company believes that the quality of its electronic security
services is higher than that of many of its competitors and, therefore, the
Company's prices may be higher than those charged by its competitors.
MANUFACTURING
The Company's 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.
The Company's Fire and Security Services segment manufactures certain alarm,
detection and activation devices and central monitoring station equipment which
is both installed by the Company's own units and sold to other installers of
alarm and detection devices. Otherwise, the Company does not manufacture the
electronic security system components which it installs, although it does
provide its own specifications to manufacturers for certain security system
components and undertakes some final assembly work in respect of more
sophisticated systems. These products are manufactured primarily outside of the
United States.
IV. FLOW CONTROL PRODUCTS
The Company, through its subsidiaries, manufactures and distributes flow
control products in North America, Latin America, Continental Europe, the United
Kingdom, and the Asia-Pacific region. Flow control products and services
include:
- pipe, fittings, valves, valve actuators, couplings and related products
which are used to transport, control and measure the flow of liquids and
gases;
- fire sprinkler devices, specialty valves, plastic pipe and fittings used
in commercial, residential and industrial fire protection systems; and
- a broad range of environmental, consulting and engineering services.
During August 1999, the Company completed the sale of certain Flow Control
businesses, including The Mueller Company, a manufacturer of valves, fire
hydrants and related products, and portions of Grinnell Supply Sales &
Manufacturing, a manufacturer and distributor of commodity pipe fittings and
related products. The reason for the sale of these businesses was due to high
cyclicality and increased competition related to their products.
MANUFACTURING
VALVES AND RELATED PRODUCTS
Tyco Flow Control manufactures a wide variety of standard and highly
specialized valves and valve products on a worldwide basis. The group
manufactures butterfly, ball, gate, globe, check, safety relief, knife gate,
instrumentation, sanitary and other types of valves in a variety of
configurations, body types, materials, pressure ratings and sizes. It also
manufactures related equipment, such as valve actuators, gauges, heat tracing
and leak detection systems, vapor control products and other related products,
and provides repair and inspection services. These products are manufactured in
the United States, the United Kingdom, France, Australia, Germany, Italy, The
Netherlands, Spain, New Zealand, Belgium, Brazil, Mexico, Switzerland, South
Korea, Argentina, China, Japan, Canada and India. The group's valves and
9
related products are used primarily in plumbing, HVAC systems, power generation,
food and beverage, water distribution, wastewater, chemical, petrochemical, oil
and gas, pulp and paper, commercial irrigation, mining, industrial process and
other applications. These products are sold under several trade names, including
Keystone, Anderson Greenwood, Biffi, Century Valve, Crosby, Gimpel, Hancock,
Dewrance, Yarway, Valvtron, Bayard, Edward Barber, Belgicast, Charles Winn,
Chemat, Descote, Fasani, Flo-Check, Intervalve, Hindle Cockburns, Hovap, Klein,
Neotecha, Raimondi, Sapag, Sempell, Vanessa, Valvtec, Martins, Promet, Richards,
Morin Actuators, Technaflow, Clarkson, Belucci, Intecva, Combined Instruments,
Iprosa, Whessoe Varec, Chemelex and others.
FIRE PROTECTION PRODUCTS
The Flow Control group manufactures, sells and distributes a wide variety of
products utilized by 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
which are also sold to third parties as well as to the Company's fire protection
contracting businesses on an arms-length basis. Products are manufactured in the
United States, the United Kingdom, Germany and China. During 1999, the Company
acquired Central Sprinkler Corporation which was integrated into the Flow
Control group. In addition to the Central trade name, products are also sold
under the Grinnell, GEM Sprinkler, Star Sprinkler, Wormald and other trade
names.
STEEL TUBING AND OTHER PRODUCTS
Allied Tube & Conduit ("Allied") is the leading North American manufacturer
of steel tubular products. Allied manufactures a full line of steel pipe for the
fire protection and construction industries and for commercial, residential and
institutional markets. Its Mechanical Tube Division offers steel tubing in a
wide assortment of shapes and sizes for a variety of industrial and commercial
applications. Allied's Fence Division is a leader in the manufacture of products
for the residential, industrial and commercial fence market. The Electrical
Division is a leading manufacturer of steel electrical conduit and related
products. Allied also manufactures metal framing systems, steel sign post
products, electrical cable tray and cable ladder and related products used in
the construction, industrial and original equipment markets which are sold under
the Powerstrut, Unistrut and T.J. Cope trade names. Allied's products are
manufactured in the United States and in Canada.
On November 22, 1999, the Company acquired AFC Cable Systems, Inc. ("AFC").
AFC is a manufacturer of pre-wired armored cable, flexible electric conduit and
other related products. AFC will be integrated into Allied within the Flow
Control group.
The Flow Control group also manufactures welded and drawn steel tube
products at several locations in the United Kingdom under the trade names of
Monmore Tubes, Newman Tipper Tubes, Senior Precision Tube and others. Specialty
steel strip products are manufactured under the trade names of JB&S Lees, Firth
Cleveland Steel Strip and Ductile Stourbridge. Metal framing systems and
specialty fasteners are manufactured under the Lindapter trade name and metal
framing and support systems, cable ladder and safety systems under the Unistrut
trade name.
In the Asia-Pacific region, metal framing and support systems are
manufactured under the Unistrut, A.C.S. and other trade names. Ductile iron pipe
and steel pipe, steel fittings, valves and related products, primarily for the
water industry, are manufactured at several locations in Australia.
SALES AND DISTRIBUTION
Valves and related products are sold in some locations directly by an
internal sales force and in other geographical areas by a network of independent
distributors and manufacturer's representatives. The valve industry is
fragmented and the Company competes against a number of international, national,
local and
10
specialized manufacturers on the basis of price, delivery, breadth of product
line and specialized product capability.
Flow Control's fire protection products are sold by independent distributors
and, in some cases, directly by the Company to fire protection contractors and
fabricators of fire protection systems. In the United States, Central maintains
a network of distribution facilities 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 for sale through a network of
independent distributors. In Canada, Central America, South America and the
Asia-Pacific region, fire protection products are sold through independent
distribution and directly to fire protection contractors. In Europe and the
Middle East, Flow Control operates 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 fire protection products is based
on price, delivery and breadth of product line.
Allied competes for the sale of steel pipe with other United States and
non-United States producers. The group's pipe and tube products manufactured in
the United Kingdom and Australia compete primarily with other local and national
manufacturers in those countries. Competition is based on price, service and
breadth of product line. Competition for fence products is principally from
national and regional United States producers and to a lesser extent from
non-United States companies on the basis of price, service and distribution.
Allied competes with many small regional manufacturers for the sale of
specialized industrial tubing on the basis of price and breadth of product line.
The group's electrical conduit and other electrical products are sold to
independent distributors on the basis of price and service.
ENVIRONMENTAL, CONSULTING AND ENGINEERING SERVICES
Through its Earth Technology Corporation ("Earth Tech") subsidiary, the Flow
Control Products segment provides a broad range of environmental, consulting and
engineering services. Earth Tech's principal services consist of full-spectrum
water, wastewater, environmental and hazardous waste management services. These
services include infrastructure design and construction services for
institutional, civic, commercial and industrial clients; design, construction
management and operating services for water and wastewater treatment facilities
for municipal and industrial clients; and transportation engineering and
consulting.
In 1998, Tyco acquired Rust Environmental and Infrastructure, Inc. ("Rust
Environmental"). The operations of Rust Environmental and Earth Tech were
combined and these businesses now operate through a network of local offices
located principally throughout North America. Earth Tech competes with a number
of international, national, regional and local companies on the basis of price
and the breadth and quality of services.
During Fiscal 1999, the Company acquired Babcock Water Engineering Ltd. in
the United Kingdom, Multiservice Engenharia, Ltda. in Brazil and P&R Holdings in
Canada. These businesses are also engaged in environmental, water supply,
wastewater, infrastructure and transportation engineering and consulting
services and have been integrated into Earth Tech to form a worldwide service
network.
BACKLOG
At September 30, 1999, the Company had a backlog of unfilled orders of
approximately $7,581.1 million, compared to a backlog of approximately
$5,118.2 million as of September 30, 1998. The Company expects that
approximately 79 percent of its backlog at September 30, 1999 will be filled
during the year ending September 30, 2000.
11
Backlog by industry segment is as follows (in millions):
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- -------------
Telecommunications and Electronics................. $4,974.5 $2,951.1
Flow Control Products.............................. 1,516.5 1,129.2
Fire and Security Services......................... 986.6 965.4
Healthcare and Specialty Products.................. 103.5 72.5
-------- --------
$7,581.1 $5,118.2
======== ========
Backlog increased in each of the Company's business segments. Within the
Telecommunications and Electronics segment, backlog increased principally due to
contracts awarded to TSSL due to continually increasing demands for undersea
fiber optic cable capacity. Within the Flow Control Products segment, backlog
increased principally due to an increase in backlog at Earth Tech related to its
water and wastewater facilities contracts. Within the Fire and Security Services
segment, backlog increased principally due to an increase in backlog at the
Company's worldwide security and European fire protection businesses. Within the
Healthcare and Specialty Products segment, the increase resulted principally
from an increase in demand for the products sold by Tyco Plastics and Adhesives.
PROPERTIES
The Company's operations are conducted in facilities throughout the world
aggregating some 59.1 million square feet of floor space, of which approximately
34.4 million square feet are owned and approximately 24.7 million square feet
are leased. These facilities house manufacturing and warehousing operations as
well as sales, engineering and administrative offices.
The Telecommunications and Electronics segment has manufacturing facilities
in North America, Central and South America, the United Kingdom, Ireland,
Belgium, Germany, China, Japan, Singapore, Italy and France. The group occupies
some 21.9 million square feet, of which 14.3 million square feet are owned and
7.6 million square feet are leased.
The Healthcare and Specialty Products segment has manufacturing facilities
in North America, South America, the United Kingdom, Germany, Ireland, France,
Spain, China, Thailand, Japan and Malaysia. There are 28 vehicle auction
facilities located in the United States. The group occupies some 19.7 million
square feet, of which 11.8 million square feet are owned and 7.9 million square
feet are leased.
The Flow Control Products segment has manufacturing facilities in North
America, the United Kingdom, France, Australia, Germany, Italy, The Netherlands,
Spain, New Zealand, Brazil, Mexico, Switzerland, South Korea, Argentina, China,
Japan, India, Malaysia, and Scotland. The group stocks and sells products
through warehouse and distribution centers in the United States, The
Netherlands, the United Kingdom, Germany, France, Spain, Italy, Scandinavia,
Australia, New Zealand, Singapore and the Middle East. The group occupies some
8.9 million square feet, of which 5.7 million square feet are owned and
3.2 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, the United Kingdom, The
Republic of Ireland, France, Spain, Belgium, The Netherlands, Germany, Italy,
Austria, Hungary, Switzerland, Denmark, Norway, Sweden, United Arab Emirates,
Saudi Arabia, Australia, New Zealand, Hong Kong, Singapore, Taiwan, Thailand,
Vietnam and Indonesia. 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 the
United States, Canada, the United Kingdom, Spain, France, Belgium, Greece, The
Netherlands and The Republic of Ireland. The
12
environmental services business operates through a network of offices throughout
North America. The segment occupies some 8.6 million square feet, of which
2.6 million square feet are owned and 6.0 million square feet are leased.
In the opinion of management, the Company's properties and equipment
generally are in good operating condition and are adequate for its present
needs. The Company does not anticipate difficulty in renewing existing leases as
they expire or in finding alternative facilities. See Note 17 to Consolidated
Financial Statements for a description of the Company's rental obligations.
RESEARCH AND DEVELOPMENT
The amounts expended for Company-sponsored research and development during
Fiscal 1999, Fiscal 1998, and Fiscal 1997 were $450.5 million, $511.4 million
and $326.0 million, respectively. Customer-funded research and development
expenditures were $4.6 million, $6.8 million and $1.9 million, respectively.
Approximately 5,600 full-time scientists, engineers and other technical
personnel are engaged in product research and development activities.
Research activity at TSSL involves the continuing design and development of
processes for the next generation of undersea fiber optic cable, while Allied
and the printed circuit companies are principally involved with process
development. Activity at Tyco Electronics focuses on new product development and
a continual expansion of technical capabilities. Tyco Healthcare focuses on
acquiring rights to new products and technologies to complement existing product
lines and applying expertise to refine and successfully commercialize such
products and technologies. Research activity in the Fire and Security Services
and Flow Control Products segments is related to improvements in hydraulic
design which controls the motion of fluids, resulting in new sprinkler devices
and flow control products. Research and development activity at the specialty
packaging companies involves new product applications.
RAW MATERIALS
The Company is one of the largest buyers of steel and plastic resin in the
United States. Other principal materials include copper, brass, plastic,
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 materials used in the Fire and
Security Services segment and the Flow Control Products segment, principally
certain valves and fittings and security systems, are purchased for installation
in fire protection systems or for distribution. Materials are purchased both in
and outside of the United States from a large number of independent sources.
There have been no shortages in materials which have had a material adverse
effect on the Company's businesses.
PATENTS AND TRADEMARKS
The Company owns a number 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. The Company also owns a number of trademarks
and is a licensee under a number of 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 the Company's segments.
The patents and licenses have remaining lives of from one to twenty years.
Kendall sells certain products under trade names owned by its suppliers and
packages certain products under customer trademarks and labels.
13
EMPLOYEES
The Company employed approximately 182,000 persons at September 30, 1999, of
which approximately 93,000 are employed in the U.S. and 89,000 outside the
United States. The Company has collective bargaining agreements with labor
unions covering approximately 29,800 employees at certain of its North American,
European and Asia-Pacific businesses. While the Company believes that its
relations with the labor unions and with its employees are generally
satisfactory, a number of local unions affiliated with the United Association of
Plumbers and Pipefitters, representing 64 percent of Grinnell Fire Protection's
North American union employees at the time of their strike in 1994, continue to
be on strike. The action is still pending. See discussion under "Fire and
Security Services" above.
ENVIRONMENTAL MATTERS
The Company makes a substantial effort to operate its 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 the
capital expenditures, earnings or competitive position of the Company.
The Company believes that, consistent with applicable laws and regulations,
it exercises due care and takes appropriate precautions in the management of
wastes. The Company has received notification from the United States
Environmental Protection Agency, and from certain state environmental agencies,
that conditions at a number of sites where hazardous wastes were disposed of by
the Company and other persons require cleanup and other possible remedial
action.
The Company also has a number of projects underway at several of its
manufacturing facilities in order to comply with environmental laws. In
addition, the Company remains responsible for certain environmental issues at
manufacturing locations sold by the Company. 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.
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
the Company's experience with the foregoing environmental matters, the Company
has concluded that there is at least a reasonable possibility that remedial
costs will be incurred with respect to these issues in an aggregate amount in
the range of $35.6 million to $124.8 million. As of September 30, 1999, the
Company has concluded that the most probable amount which will be incurred
within this range is $53.7 million, $29.4 million of such amount is included in
accrued expenses and other current liabilities and $24.3 million is included in
other long-term liabilities in the Consolidated Balance Sheet. Based upon
information available to the Company, at those sites where there has been an
allocation of the liability for cleanup costs among a number of parties,
including the Company, and such liability could be joint and several, management
believes it is probable that other responsible parties will fully pay the cost
allocated to them, except with respect to one site for which the Company has
assumed that one of the identified responsible parties will be unable to pay the
cost apportioned to it and that such party's cost will be reapportioned among
the remaining responsible parties. In view of the Company's financial position
and reserves for environmental matters of $53.7 million, the Company has
concluded that its payment of such estimated amounts will not have a material
adverse effect on its consolidated financial position, results of operations or
liquidity.
ITEM 2. PROPERTIES
See Item 1. "Business--Properties" for information relating to the Company's
owned and leased property.
14
ITEM 3. LEGAL PROCEEDINGS
For information regarding wire reports of purported stockholder class
actions seeking damages against the Company and certain of its officers, see
Current Report on Form 8-K filed on December 10, 1999.
See the discussions under Item 1. "Business--Environmental Matters".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
In July 1997, a wholly-owned subsidiary of what was formerly called ADT
Limited ("ADT") merged with Tyco International Ltd. ("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").
The executive officers of the Company and executive officers of certain
subsidiaries are as follows:
L. Dennis Kozlowski, age 53, Chairman of the Board, President and Chief
Executive Officer since July 1997. Chairman of the Board of Former Tyco from
January 1993 to July 1997; Chief Executive Officer of Former Tyco since
July 1992, President of Former Tyco since 1989; associated with Former Tyco
since 1975.
Mark A. Belnick, age 53, Executive Vice President and Chief Corporate
Counsel since September 1998. Prior to joining Tyco, Mr. Belnick was a Senior
Partner at the international law firm of Paul, Weiss, Rifkind, Wharton &
Garrison since 1987.
Jerry R. Boggess, age 55, President of Tyco Fire and Security Services since
August 1993. Vice President of Former Tyco since February 1996; associated with
Former Tyco since 1968.
Neil R. Garvey, age 44, President of Tyco Submarine Systems Ltd. since
July 1997. President of Simplex Technologies from July 1995 to June 1997; Vice
President of Sales and Marketing of Simplex Technologies from June 1992 to
July 1995; associated with Former Tyco since 1979.
Juergen W. Gromer, age 54, President of Tyco Electronics since April 1999;
Senior Vice President, Worldwide Sales and Service of AMP from 1998 to
April 1999; President, Global Automotive Division, and Corporate Vice President
of AMP from 1997 to 1998; Vice President and General Manager of various
divisions of AMP from 1990 to 1997.
Robert P. Mead, age 48, President of the Flow Control Products segment since
May 1993. Vice President of Former Tyco since August 1993; associated with
Former Tyco since 1973.
Richard J. Meelia, age 50, President of Tyco Healthcare Group since 1995;
Group President of Kendall Healthcare Products Company from January 1991 to
1995.
Mark H. Swartz, age 39, Executive Vice President and Chief Financial Officer
since July 1997. Vice President and Chief Financial Officer of Former Tyco since
February 1995; Director of Mergers and Acquisitions of Former Tyco from 1993 to
1995; associated with Former Tyco since 1991.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON SHARES AND RELATED SECURITY HOLDER
MATTERS
The number of registered holders of the Company's common shares at
November 8, 1999 was 32,947.
Tyco common shares are listed and traded on the New York Stock Exchange
("NYSE"), the London Stock Exchange and the Bermuda Stock Exchange. The
following table sets forth the high and low sales
15
prices per share of Tyco common shares as reported in the NYSE Composite
Transaction Tape 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 two-for-one stock splits distributed on October 22,
1997 and October 21, 1999, both of which were effected in the form of a stock
dividend.
FISCAL 1999 FISCAL 1998
------------------------------------- -------------------------------------
MARKET PRICE RANGE MARKET PRICE RANGE
------------------- DIVIDEND PER ------------------- DIVIDEND PER
QUARTER HIGH LOW COMMON SHARE(1) HIGH LOW COMMON SHARE(1)
- ------- -------- -------- --------------- -------- -------- ---------------
First......................... $39.5938 $20.1563 $0.0125 $22.7500 $17.0000 $ 0.0125
Second........................ 39.9688 33.7500 0.0125 28.7188 21.1875 0.0125
Third......................... 47.4063 35.1875 0.0125 31.5313 25.7188 0.0125
Fourth........................ 52.9375 47.1250 0.0125 34.5000 25.0000 0.0125
------- --------
$ 0.05 $ 0.05
======= ========
- ------------------------
(1) Prior to their mergers with Tyco, USSC paid quarterly dividends of $0.04 per
share in Fiscal 1998 and AMP paid dividends of $0.27 per share in the first
two quarters of Fiscal 1999, $0.26 per share in the first quarter of Fiscal
1998 and $0.27 per share in the last three quarters of Fiscal 1998. The
payment of dividends by Tyco in the future will depend on business
conditions, Tyco's financial condition and earnings and other factors.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial information
of the Company for the fiscal years ended September 30, 1999 and 1998, the
nine-month fiscal period ended September 30, 1997 and the two years in the
period ended December 31, 1996. This selected financial information should be
read in conjunction with the Company's Consolidated Financial Statements and
related notes. The selected financial data reflect the combined results of
operations and financial position of Tyco, Former Tyco, Keystone, Inbrand (from
January 1, 1997), USSC and AMP restated for all periods presented pursuant to
the pooling of interests method of accounting. The selected financial data prior
to January 1, 1997 do not reflect the results of operations and financial
position of Inbrand, which was acquired in 1997
16
and accounted for under the pooling of interests method of accounting, due to
immateriality. See Notes 1 and 2 to the Consolidated Financial Statements.
YEAR ENDED NINE MONTHS YEAR ENDED
SEPTEMBER 30, ENDED DECEMBER 31,
--------------------- SEPTEMBER 30, -----------------------
1999(1) 1998(2) 1997(3)(4) 1996(5)(6) 1995(5)(7)
--------- --------- ------------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Consolidated Statements of Operations Data:
Net sales................................. $22,496.5 $19,061.7 $12,742.5 $14,671.0 $13,152.1
Operating income.......................... 2,136.8 1,948.1 125.8 587.4 1,447.5
Income (loss) from continuing
operations.............................. 1,031.0 1,168.6 (348.5) 49.4 755.5
Income (loss) from continuing operations
per common share:
Basic................................... 0.63 0.74 (0.24) 0.02 0.55
Diluted................................. 0.62 0.72 (0.24) 0.02 0.54
Cash dividends per common share (8)....... See (9) below.
Consolidated Balance Sheet Data:
Total assets.............................. $32,361.6 $23,440.7 $16,960.8 $14,686.2 $13,143.8
Long-term debt............................ 9,109.4 5,424.7 2,785.9 2,202.4 2,229.7
Shareholders' equity...................... 12,332.6 9,901.8 7,478.7 7,022.6 6,792.1
- ------------------------
(1) Operating income in the fiscal year ended September 30, 1999 includes
charges of $1,261.7 million for merger, restructuring and other
non-recurring charges, of which $78.9 million is included in cost of sales,
and charges of $335.0 million for the impairment of long-lived assets
related to the mergers with USSC and AMP and AMP's profit improvement plan.
See Notes 12 and 16 to the Consolidated Financial Statements.
(2) Operating income in the fiscal year ended September 30, 1998 includes
charges of $80.5 million primarily related to costs to exit certain
businesses in USSC's operations and restructuring charges of $12.0 million
related to the operations of USSC. 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. See Note 16 to
the Consolidated Financial Statements.
(3) In September 1997, the Company changed its fiscal year end from December 31
to September 30. Accordingly, the nine-month transition period ended
September 30, 1997 is presented.
(4) Operating income in the nine months ended September 30, 1997 includes
charges related to merger, restructuring and other non-recurring costs of
$917.8 million and impairment of long-lived assets of $148.4 million
primarily related 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 USSC's
operations. See Notes 12 and 16 to the Consolidated Financial Statements.
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.
(5) Prior to their respective mergers, ADT, Keystone, USSC and AMP had December
31 fiscal year ends and Former Tyco had a June 30 fiscal year end. The
selected consolidated financial data have been combined using a December 31
fiscal year end for ADT, Keystone, Former Tyco, USSC and AMP for the year
ended December 31, 1996. For 1995, the results of operations and financial
position reflect the combination of ADT, Keystone, USSC and AMP with a
December 31 fiscal year end and Former Tyco with a June 30 fiscal year end.
Net sales and net income for Former Tyco for the period July 1,
17
1995 through December 31, 1995, which results are not included in the
historical combined results, were $2,460.1 million and $136.4 million,
respectively.
(6) Operating income in 1996 includes non-recurring charges of $744.7 million
related to the adoption of Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of,"
$237.3 million related principally to the restructuring of ADT's electronic
security services business in the United States and United Kingdom,
$98.0 million to exit various product lines and manufacturing operations
associated with AMP's operations and $8.8 million of fees and expenses
related to ADT's acquisition of Automated Security (Holdings) plc, a United
Kingdom company.
(7) Operating income in 1995 includes a loss of $65.8 million on the disposal of
the European auto auction business and a gain of $31.4 million from the
disposal of the European electronic article surveillance business. Operating
income also includes non-recurring charges of $97.1 million for
restructuring charges at ADT and Keystone, and for the fees and expenses
related to the 1994 merger of Kendall International, Inc. and Former Tyco,
as well as a charge of $8.2 million relating to the divestiture of certain
assets by Keystone.
(8) Per share amounts have been retroactively restated to give effect to the
mergers with Former Tyco, Keystone, Inbrand, USSC 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 distributed 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. USSC paid quarterly dividends of $0.04 per
share in the year ended September 30, 1998 and the nine months ended
September 30, 1997 and aggregate dividends of $0.08 per share in 1996 and
1995. 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, aggregate dividends of $1.00 per share in 1996 and $0.92
per share in 1995. 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 78 to 93 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 78 to 93 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:
Reports of Independent Accountants
Consolidated Balance Sheets--September 30, 1999 and September 30, 1998
18
Consolidated Statements of Operations for the fiscal years ended
September 30, 1999 and 1998 and the nine-month fiscal period ended
September 30, 1997
Consolidated Statements of Shareholders' Equity for the fiscal years
ended September 30, 1999 and 1998 and the nine-month fiscal period ended
September 30, 1997
Consolidated Statements of Cash Flows for the fiscal years ended
September 30, 1999 and 1998 and the nine-month fiscal period ended
September 30, 1997
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).
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 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. MANAGEMENT REMUNERATION
Information concerning management remuneration 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.
19
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) Exhibits
2.1 Agreement and Plan of Merger, dated as of November 22, 1998,
by and among Tyco International (PA) Inc., AMP Merger Corp.
and AMP Incorporated, including guarantee of Tyco
International Ltd. (Incorporated by reference to the
Registrant's Form S-4 filed December 11, 1998.)
2.2 Agreement and Plan of Merger, dated February 4, 1997, by and
among United States Surgical Corporation, USSC Del Medical,
Inc. and Progressive Angioplasty Systems, Inc. (15)
2.3 First Amendment, dated August 6, 1997, by and between United
States Surgical Corporation, USSC Del Medical, Inc. and
Progressive Angioplasty Systems, Inc. (15)
2.4 Agreement and Plan of Merger, dated as of May 25, 1998, by
and among Tyco International Ltd., T11 Acquisition Corp. and
United States Surgical Corporation. (10)
2.5 Agreement and Plan of Merger, dated as of May 19, 1999, by
and among Tyco International Ltd., Tyco International (PA)
Inc. and Raychem Corporation. (Incorporated by reference to
the Registrant's Form S-4 filed June 11, 1999.)
2.6 Agreement and Plan of Merger, dated as of August 23, 1999,
by and among General Acquisition Corp., General Sub
Acquisition Corp. and General Surgical Innovations, Inc.
(Incorporated by reference to the Registrant's Form S-4
filed on September 24, 1999.)
2.7 Agreement and Plan of Merger, dated as of August 31, 1999,
by and among AFC Cable Systems, Inc., Tyco International
(NV) Inc. and Tyco Acquisition Corp. XXII, including
guarantee of Tyco International Ltd. (Incorporated by
reference to the Registrant's Form S-4 filed September 29,
1999.)
3.1 Memorandum of Association (as altered) (Incorporating all
amendments to May 26, 1992). (1)
3.2 Certificate of Incorporation on change of name dated July 2,
1997. (6)
3.3 Bye-Laws (incorporating all amendments to April 1, 1999).
(11)
4.1 Indenture relating to the senior notes dated August 4, 1993
among ADT Operations, Inc., as issuer, and ADT Limited and
certain subsidiaries of ADT Operations, Inc., as guarantors,
and The Chase Manhattan Bank (National Association), as
trustee, and the form of senior note included therein. (2)
4.2 First Supplemental Indenture to the Indenture, dated as of
August 4, 1993, among ADT Operations, Inc., the Guarantors
Named Therein and The Chase Manhattan Bank, as Trustee,
dated as of July 1, 1997, in respect of the $250,000,000
8 1/4% Senior Notes due 2000. (7)
4.3 Amended and Restated Indenture dated as of July 2, 1997, in
respect of the $250,000,000 8 1/4% Senior Notes due 2000.
(7)
4.4 Indenture dated as of July 1, 1995 among ADT Operations,
Inc., ADT Limited and Bank of Montreal Trust Company, as
trustee and the form of note included therein. (3)
4.5 Rights Agreement between ADT Limited and Citibank, N.A.
dated as of November 6, 1996. (5)
4.6 First Amendment between ADT Limited and Citibank, N.A. dated
as of March 3, 1997 to Rights Agreement between ADT Limited
and Citibank, N.A. dated as of November 6, 1996.
(Incorporated by reference to Form 8-A/A dated March 3,
1997.)
20
4.7 Second Amendment between ADT Limited and Citibank, N.A.
dated as of July 2, 1997 to the Rights Agreement
(Incorporated by reference to Form 8-A/A dated July 2,
1997.)
4.8 Indenture dated April 30, 1992 between Former Tyco and
Security Pacific National Trust Company (New York).
(Incorporated by reference to Former Tyco's Form 10-Q for
the period ended March 31, 1992.)
4.9 First Supplemental Indenture dated April 30, 1992 between
Former Tyco and Security Pacific National Trust Company (New
York). (Incorporated by reference to Former Tyco's Form 10-Q
for the period ended March 31, 1992.)
4.10 Second Supplemental Indenture, dated as of March 8, 1993,
between Former Tyco and BankAmerica National Trust Company,
as Trustee. (Incorporated by reference to Tyco International
Ltd.'s Form 8-K filed on March 8, 1993.)
4.11 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. (12)
4.12 Form of Supplemental Indenture No.1, dated as of June 9,
1998, among TIG, Tyco and The Bank of New York, as trustee
relating to the 6 1/8% Notes due 2001 of the Company
(including the form of Notes). (12)
4.13 Form of Supplemental Indenture No.2, dated as of June 9,
1998, among TIG, Tyco and The Bank of New York, as trustee
relating to the 6 3/8% Notes due 2005 of the Company
(including the form of Notes). (12)
4.14 Form of Supplemental Indenture No.3, dated as of June 9,
1998, among TIG, Tyco and The Bank of New York, as trustee
relating to the 7% Notes due 2028 of the Company (including
the form of Notes). (12)
4.15 Form of Supplemental Indenture No.4, dated as of June 9,
1998, among TIG, Tyco and The Bank of New York, as trustee
relating to the 6 1/4% Dealer remarketable
securities-SM-(Drs.-SM-) due 2013 of the Company (including
the form of Drs). (12)
4.16 Form of Supplemental Indenture No.5, dated as of November 2,
1998, among TIG, Tyco and The Bank of New York, as trustee
relating to the 5.875% Notes due 2004 of TIG (incorporated
by reference to the Registrant's Annual Report on Form 10-K
for fiscal year ended September 30, 1998).
4.17 Form of Supplemental Indenture No.6, dated as of November 2,
1998, among TIG, Tyco and The Bank of New York, as trustee
relating to the 6.125% Notes due 2004 of TIG. (incorporated
by reference to the Registrant's Annual Report on Form 10-K
for fiscal year ended September 30, 1998).
4.18 Form of Supplemental Indenture No. 9, dated as of
August 31, 1999, among TIG, Tyco and The Bank of New York,
as trustee relating to the Floating Rate Notes due 2000 of
TIG. (Filed herewith.)
4.19 Form of Supplemental Indenture No. 10, dated as of
August 31, 1999, among TIG, Tyco and The Bank of New York,
as trustee relating to the Floating Rate Notes due 2001 of
TIG. (Filed herewith.)
4.20 Form of Supplemental Indenture No. 11, dated as of
August 31, 1999, among TIG, Tyco and The Bank of New York,
as trustee relating to the 6.875% Notes due 2002. (Filed
herewith.)
4.21 Form of Supplemental Indenture No. 12, dated as of
August 31, 1999, among TIG, Tyco and The Bank of New York,
as trustee relating to the 0.57% Notes due 2000. (Filed
herewith.)
21
4.22 Form of Indenture among United States Surgical Corporation
("USSC") and The Bank of New York, as trustee relating to
the 7.25% Senior Debt Securities due 2008 of USSC
(incorporated by reference to Exhibit 4(a) to USSC's Form
S-3 (File No. 333-46239) filed March 6, 1998).
4.23 Officer's Certificate, dated March 17, 1998, defining the
terms of the debenture among USSC and The Bank of New York,
as Trustee relating to the 7.25% Senior Debt Securities due
2008 of USSC. (incorporated by reference to the Registrant's
Annual Report on Form 10-K for fiscal year ended
September 30, 1998).
4.24 Indenture, dated as of September 15, 1995, between Graphic
Controls Corporation and United States Trust Company of New
York, as Trustee (incorporated by reference to Exhibit 4.2
to the Graphic Controls Corporation's Registration Statement
on Form S-4 (File No. 33-99094)).
4.25 Form of 12% Senior Subordinated Notes due 2005 of Graphic
Controls Corporation (incorporated by reference to Exhibit
4.2 to the Graphic Controls Corporation's Registration
Statement on Form S-4 (File No. 33-99094)).
4.26 364-Day Credit Agreement, Five-Year Credit Agreement and
Bridge Credit Agreement, each dated as of June 27, 1997
(Incorporated by reference to Tyco International (US) Inc.'s
Form 10-K for the fiscal year ended June 30, 1997.)
4.27 Parent Guarantee Agreement dated as of July 2, 1997
(Incorporated by reference into Tyco International (US)
Inc.'s Form 10-K for the fiscal year ended June 30, 1997.)
4.28 $1.75 billion 364-day Credit Agreement dated February 13,
1998 held by TIG. (8)
4.29 $500 million Extendible Credit Agreement dated February 13,
1998 held by TIG. (8)
4.30 Parent Guarantee Agreement dated as of February 13, 1998.
(8)
4.31 Indenture (previously filed as Exhibit 4.1 to the
Registrants' Form S-3 (File Nos. 333-50855 and
333-50855-01)). (12)
4.32 Purchase Agreement, dated October 28, 1998, among TIG, Tyco
as guarantor, the Lehman Brothers Inc., J.P. Morgan
Securities Inc., Credit Suisse First Boston Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation. (13)
4.33 Registration Rights Agreement, dated as of November 2, 1998,
among TIG, Tyco as guarantor, the Lehman Brothers Inc., J.P.
Morgan Securities Inc., Credit Suisse First Boston
Corporation and Donaldson, Lufkin & Jenrette Securities
Corporation. (13)
4.34 364-Day Credit Agreement dated as of February 12, 1999 among
TIG, the Banks named therein and Morgan Guaranty Trust
Company of New York, as Agent. (14)
4.35 Parent Guarantee Agreement (as amended) dated as of February
12, 1999 between Tyco International Ltd. and Morgan Guaranty
Trust Company of New York, as Agent. (14)
4.36 Third Amendment between Tyco International Ltd. and
Citibank, N.A., dated as of September 10, 1999 to Rights
Agreement between Tyco International Ltd, and Citibank, N.A.
dated as of November 6, 1996 (Incorporated by reference to
an Exhibit to the Registrant's Form 8-A/A dated September
10, 1999)
10.1 Agreement and Plan of Merger, dated as of March 17, 1997, by
and among ADT Limited, Limited Apache, Inc. and Former Tyco.
(4)
10.2 Agreement and Plan of Merger, dated as of May 20, 1997, by
and among Former Tyco, T6 Acquisition Corp. and Keystone
International, Inc. (Incorporated by reference as an Exhibit
to Former Tyco's Registration Statement No. 333-31631 on
Form S-4 filed on July 18, 1997.)
22
10.3 Purchase Agreement dated December 20, 1997 by and among
American Cyanamid Company, American Home Products
Corporation, AHP Subsidiary Holding Corporation and Tyco
International (US) Inc. (9)
10.4 Parent Guarantee of obligations dated December 20, 1997. (9)
10.5 First Amendment to Purchase Agreement dated February 27,
1998 by and among American Cyanamid Company, American Home
Products Corporation, AHP Subsidiary Holding Corporation and
Tyco International (US) Inc. (9)
10.6 Rules of the ADT UK Executive Share Option Scheme (1984),
amended to reflect the reverse split of Common Shares
effective June 17, 1991. (1)*
10.7 Rules of the ADT International Executive Share Option Plan,
amended to reflect the reverse split of Common Shares
effective June 17, 1991. (1)*
10.8 Rules of the ADT UK and International Executive Share Option
Schemes (1984) New Section, amended to reflect the reverse
split of Common Shares effective June 17, 1991. (1)*
10.9 Rules of the ADT Senior Executive Share Option Plan, amended
to reflect the reverse split of Common Shares effective June
17, 1991. (1)*
10.10 US (1990) Stock Option Plan of ADT Limited, amended to
reflect the reverse split of Common Shares effective June
17, 1991. (1)*
10.11 Agreement between ADT Automotive Holdings, Inc. and Michael
J. Richardson dated as of January 29, 1997. (5)*
10.12 Incentive Compensation Agreement between ADT, Inc. and
Michael J. Richardson dated as of February 10, 1997. (5)*
10.13 Severance Agreement between ADT Security Services, Inc. and
Raymond Gross dated as of February 26, 1997. (5)*
10.14 Consulting Agreement between ADT, Inc. and John E. Danneberg
dated as of August 28, 1996. (5)*
10.15 Form of Indemnification Agreement. (5)*
10.16 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.)*
10.17 1978 Restricted Stock Ownership Plan for Key Employees.
(Incorporated by reference to Former Tyco Shareholders'
Proxy Statement for Annual Meeting of Shareholders on
November 21, 1978.)*
10.18 1981 Key Employee Loan Program. (Incorporated by reference
to Former Tyco's Form 10-K for the year ended May 31,
1982.)*
10.19 1983 Key Employee Loan Program. (Incorporated by reference
to Former Tyco's Form 10-K for the year ended May 31,
1983.)*
10.20 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.)*
10.21 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.)*
10.22 Tyco Incentive Compensation Plan. (Incorporated by reference
to Former Tyco's Form 10-K for the year ended June 30,
1994.)*
10.23 1994 Restricted Stock Ownership Plan for Key Employees.
(Incorporated by reference to Former Tyco Shareholders'
Proxy Statement for Annual Meeting of Shareholders on
October 19, 1994.)
23
10.24 Tyco International Ltd. Supplemental Executive Retirement
Plan (Incorporated by reference to Former Tyco's Form 10-K
for the year ended June 30, 1995).*
10.25 The Tyco International Ltd. Long Term Incentive Plan II.
(Incorporated by reference to the Registrant's Form S-8
filed March 25, 1999.)*
21.1 Subsidiaries of the registrant. (Filed herewith.)
23.1 Consent of PricewaterhouseCoopers (Filed herewith.)
23.2 Consent of Deloitte & Touche LLP (Filed herewith.)
23.3 Consent of Arthur Andersen LLP (Filed herewith.)
27 Financial Data Schedule. (Filed herewith.)
- ------------------------
* Management contract or compensatory plan.
(1) Incorporated by reference to an Exhibit to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992.
(2) Incorporated by reference to an Exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993.
(3) Incorporated by reference to an Exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995.
(4) Incorporated by reference to an Exhibit to the Former Tyco's Current Report
dated March 17, 1997 on Form 8-K filed March 25, 1997.
(5) Incorporated by reference to an Exhibit to the Registrant's Form 8-A dated
November 12, 1996.
(6) Incorporated by reference to an Exhibit to the Registrant's Current Report
dated July 2, 1997 on Form 8-K filed July 10, 1997.
(7) Incorporated by reference to an Exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997.
(8) Incorporated by reference to an Exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1997.
(9) Incorporated by reference to an Exhibit to the Registrant's Current Report
dated February 27, 1998 on Form 8-K filed March 11, 1998.
(10) Incorporated by reference to an Exhibit to the Registrant's Current Report
dated May 25, 1998 on Form 8-K filed June 24, 1998.
(11) Incorporated by reference to an Exhibit to the Registrant's Registration
Statement on Form S-3 filed April 23, 1998 and Current Report dated
September 10, 1999 on Form 8-K filed September 14, 1999.
(12) Incorporated by reference to an Exhibit to the Registrant's and TIG's
Co-Registration Statement on Form S-3 (File Nos. 333-50855 and
333-50855-01) filed June 9, 1998.
(13) Incorporated by reference to an Exhibit to the Registrant's and TIG's
Co-Registration Statement on Form S-4 filed January 29, 1999.
(14) Incorporated by reference to an Exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1998.
(15) Incorporated by reference to an Exhibit to the Registrant's Registration
Statement on Form S-3 filed on March 2, 1999.
24
(c) Reports on Form 8-K.
Current Report on Form 8-K filed on July 21, 1999 containing the press
release of Tyco dated July 20, 1999 announcing third quarter earnings, the sale
of certain of its Flow Control Products businesses and a two-for-one stock
split.
Current Report on Form 8-K filed on August 27, 1999 containing press
releases of Tyco dated August 12, 1999 and August 18, 1999 announcing the
consummation of the acquisition of Raychem Corporation and the results of the
proration of the merger consideration for Raychem shareholders, respectively.
Current Report on Form 8-K filed on September 14, 1999 containing an
approved increase in the number of authorized Tyco common shares and an
amendment to the Rights Agreement between Tyco International Ltd. and Citibank,
N.A., dated as of November 6, 1996.
Current Report on Form 8-K filed on October 22, 1999 announcing fourth
quarter earnings and the distribution of a two-for-one stock split.
Current Report on Form 8-K filed on November 9, 1999 containing Amendment
No. 1 to the Agreement and Plan of Merger, dated as of August 23, 1999 by and
among General Acquisition, Tyco Acquisition Corp. XXIII (successor by assignment
to General Sub Acquisition Corp.), a Delaware corporation and a wholly-owned
subsidiary of General Acquisition, and General Surgical Innovations, Inc.
Current Report on Form 8-K filed on November 22, 1999 containing Amendment
No. 1 to the Agreement and Plan of Merger, dated as of August 31, 1999 by and
among Tyco (NV), Tyco Acquisition Corp. XXII, a Delaware corporation and a
wholly-owned subsidiary of Tyco (NV), and AFC Cable Systems, Inc., a Delaware
corporation.
Current Report on Form 8-K filed on December 9, 1999 containing Company
press release announcing the SEC's nonpublic informal inquiry relating to
charges and reserves taken in connection with the Company's acquisitions.
Current Report on Form 8-K filed on December 10, 1999 disclosing wire
reports of purported stockholder class actions seeking damages against the
Company and certain of its officers.
25
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 13, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. DENNIS KOZLOWSKI
-------------------------------------------
L. Dennis Kozlowski Chairman of the Board,
Chief Executive Officer,
President and Director
(Principal Executive
Officer)
/s/ MICHAEL A. ASHCROFT
------------------------------------------- Director
Michael A. Ashcroft
/s/ JOSHUA M. BERMAN
------------------------------------------- Director, Vice President
Joshua M. Berman
/s/ RICHARD S. BODMAN
------------------------------------------- Director December 13, 1999
Richard S. Bodman
/s/ JOHN F. FORT
------------------------------------------- Director
John F. Fort
/s/ STEPHEN W. FOSS
------------------------------------------- Director
Stephen W. Foss
26
SIGNATURE TITLE DATE
--------- ----- ----
/s/ PHILIP M. HAMPTON
------------------------------------------- Director
Philip M. Hampton
/s/ JAMES S. PASMAN, JR.
------------------------------------------- Director
James S. Pasman, Jr.
/s/ W. PETER SLUSSER
------------------------------------------- Director
W. Peter Slusser
/s/ MARK H. SWARTZ Executive Vice President
------------------------------------------- and Chief Financial
Mark H. Swartz Officer
/s/ FRANK E. WALSH, JR.
------------------------------------------- Director
Frank E. Walsh, Jr.
27
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of Tyco International Ltd.
In our opinion, based upon our audits and the reports of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of operations, shareholders' equity and cash flows present fairly, in all
material respects, the financial position of Tyco International Ltd. and its
subsidiaries at September 30, 1999 and 1998, and the results of their operations
and their cash flows for the years ended September 30, 1999 and 1998, and the
nine months ended September 30, 1997, in conformity with accounting principles
generally accepted in the United States. 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 consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits. We did not audit the financial statements of AMP Incorporated, a wholly
owned subsidiary, at September 30, 1998, and for the year ended September 30,
1998 and the nine months ended September 30, 1997, which statements reflect
total assets constituting 20.1% of consolidated total assets as of September 30,
1998, and net sales constituting 29.0% and 33.6% of consolidated net sales for
the year ended September 30, 1998 and the nine months ended September 30 1997,
respectively. We did not audit the financial statements of United States
Surgical Corporation, a wholly owned subsidiary, for the nine months ended
September 30, 1997, which statements reflect net sales constituting 6.8% of
consolidated net sales for the nine months ended September 30, 1997. Those
statements were audited by other auditors whose reports thereon have been
furnished to us, and our opinion expressed herein, insofar as it relates to the
amounts included for AMP Incorporated and United States Surgical Corporation, as
of and for the periods described above, is based solely on the reports of the
other auditors. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, 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 and the reports of other
auditors provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS
Hamilton, Bermuda
October 21, 1999
28
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors,
United States Surgical Corporation:
We have audited the consolidated statements of operations, changes in
stockholders' equity and cash flows of United States Surgical Corporation and
subsidiaries for the nine month period ended September 30, 1997 and the related
financial statement schedule for the nine month period ended September 30, 1997
which are not included herein. These financial statements are the responsibility
of United States Surgical Corporation's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated results of operations and cash flows of
United States Surgical Corporation and subsidiaries for the nine month period
ended September 30, 1997, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
herein.
DELOITTE & TOUCHE LLP
Stamford, Connecticut
September 30, 1998
29
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of AMP Incorporated:
We have audited the consolidated balance sheet of AMP Incorporated (a
Pennsylvania corporation) and subsidiaries as of September 30, 1998, the related
consolidated statements of income, shareholders' equity and cash flows for the
year ended September 30, 1998, and the nine months ended September 30, 1997,
which are not included herein. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AMP Incorporated and subsidiaries as of September 30, 1998, and the consolidated
results of their operations and their cash flows for the year ended
September 30, 1998, and the nine months ended September 30, 1997, in conformity
with generally accepted accounting principles.
As explained in Note 1 to the consolidated financial statements, effective
January 1, 1997, the Company changed its method of accounting for costing its
inventories.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule II, which is not included
herein, is presented for purposes of complying with the Securities and Exchange
Commission rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
February 12, 1999
(except with respect to the matter disclosed in
Note 18--Merger with Tyco International Ltd.,
as to which the date is April 2, 1999)
30
TYCO INTERNATIONAL LTD.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS, EXCEPT SHARE DATA)
CURRENT ASSETS:
Cash and cash equivalents................................... $ 1,762.0 $ 1,072.9
Receivables, less allowance for doubtful accounts of $329.8
in 1999 and $317.6 in 1998................................ 4,582.3 3,478.4
Contracts in process........................................ 536.6 565.3
Inventories................................................. 2,849.1 2,610.0
Deferred income taxes....................................... 711.6 797.6
Prepaid expenses and other current assets................... 721.2 430.7
--------- ---------
Total current assets........................................ 11,162.8 8,954.9
PROPERTY, PLANT AND EQUIPMENT, NET.......................... 7,322.4 6,104.3
GOODWILL AND OTHER INTANGIBLE ASSETS, NET................... 12,158.9 7,105.5
LONG-TERM INVESTMENTS....................................... 269.7 228.4
DEFERRED INCOME TAXES....................................... 668.8 320.9
OTHER ASSETS................................................ 779.0 726.7
--------- ---------
TOTAL ASSETS............................................ $32,361.6 $23,440.7
========= =========
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt...... $ 1,012.8 $ 815.0
Accounts payable............................................ 2,530.8 1,733.4
Accrued expenses and other current liabilities.............. 3,599.7 3,069.3
Contracts in process--billings in excess of costs........... 977.9 332.9
Deferred revenue............................................ 258.8 266.5
Income taxes................................................ 798.0 773.9
Deferred income taxes....................................... 1.0 15.2
--------- ---------
Total current liabilities................................... 9,179.0 7,006.2
LONG-TERM DEBT.............................................. 9,109.4 5,424.7
OTHER LONG-TERM LIABILITIES................................. 1,236.4 976.8
DEFERRED INCOME TAXES....................................... 504.2 131.2
--------- ---------
TOTAL LIABILITIES....................................... 20,029.0 13,538.9
--------- ---------
COMMITMENTS AND CONTINGENCIES (NOTE 17)
SHAREHOLDERS' EQUITY:
Preference shares, $1 par value, 125,000,000 authorized,
none issued............................................... -- --
Common shares, $0.20 par value, 2,500,000,000 shares
authorized; 1,690,175,338 shares outstanding in 1999 and
1,620,463,428 shares outstanding in 1998, net of
11,432,678 shares owned by subsidiaries in 1999 and
6,742,006 shares owned by subsidiaries in 1998............ 338.0 324.1
Capital in excess:
Share premium............................................. 4,881.5 4,035.0
Contributed surplus, net of deferred compensation of $30.7
in 1999 and $67.3 in 1998............................... 3,607.6 2,584.0
Accumulated earnings........................................ 3,955.6 3,162.6
Accumulated other comprehensive loss........................ (450.1) (203.9)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY.............................. 12,332.6 9,901.8
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............. $32,361.6 $23,440.7
========= =========
See Notes to Consolidated Financial Statements.
31
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
------------- ------------- -------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
NET SALES.............................................. $22,496.5 $19,061.7 $12,742.5
Cost of sales.......................................... 14,405.6 12,694.8 8,523.6
Selling, general and administrative expenses........... 4,436.3 4,161.9 2,635.8
Merger, restructuring and other non-recurring
charges.............................................. 1,182.8 256.9 947.9
Charge for the impairment of long-lived assets......... 335.0 -- 148.4
Write-off of purchased in-process research and
development.......................................... -- -- 361.0
--------- --------- ---------
OPERATING INCOME....................................... 2,136.8 1,948.1 125.8
Interest income........................................ 61.5 62.6 43.8
Interest expense....................................... (547.1) (307.9) (170.0)
--------- --------- ---------
Income (loss) before income taxes, extraordinary items
and cumulative effect of accounting changes.......... 1,651.2 1,702.8 (0.4)
Income taxes........................................... (620.2) (534.2) (348.1)
--------- --------- ---------
Income (loss) before extraordinary items and cumulative
effect of accounting changes......................... 1,031.0 1,168.6 (348.5)
Extraordinary items, net of taxes...................... (45.7) (2.4) (58.3)
Cumulative effect of accounting changes, net of
taxes................................................ -- -- 15.5
--------- --------- ---------
NET INCOME (LOSS)...................................... 985.3 1,166.2 (391.3)
Dividends on preference shares......................... -- -- (4.7)
--------- --------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS..... $ 985.3 $ 1,166.2 $ (396.0)
========= ========= =========
BASIC EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary items and
cumulative effect of accounting changes............ $ 0.63 $ 0.74 $ (0.24)
Extraordinary items, net of taxes.................... (0.03) -- (0.04)
Cumulative effect of accounting changes, net of
taxes.............................................. -- -- 0.01
Net income (loss) per common share................... 0.60 0.74 (0.27)
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary items and
cumulative effect of accounting changes............ $ 0.62 $ 0.72 $ (0.24)
Extraordinary items, net of taxes.................... (0.03) -- (0.04)
Cumulative effect of accounting changes, net of
taxes.............................................. -- -- 0.01
Net income (loss) per common share................... 0.59 0.72 (0.27)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic................................................ 1,641.3 1,583.4 1,476.7
Diluted.............................................. 1,674.8 1,624.7 1,476.7
See Notes to Consolidated Financial Statements.
32
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
PREFERRED COMMON ACCUMULATED
FOR THE NINE MONTHS ENDED STOCK CONTRIBUTED SHARES CONTRIBUTED OTHER
SEPTEMBER 30, 1997 AND THE YEARS $5.00 SURPLUS-- $0.20 SHARE SURPLUS-- ACCUMULATED COMPREHENSIVE
ENDED SEPTEMBER 30, 1998 AND 1999 PAR VALUE PREFERRED PAR VALUE PREMIUM COMMON EARNINGS INCOME (LOSS)
- ----------------------------------- --------- ----------- --------- --------- ----------- ------------ --------------
(IN MILLIONS)
BALANCE AT JANUARY 1, 1997, AS
PREVIOUSLY RESTATED.............. $ .7 $ 190.8 $281.7 $1,262.6 $2,339.9 $2,919.4 $ 72.8