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Tyco International Reports 42 Percent First Quarter Earnings Per Share Increase.

Strong Operating Results In All Segments Contribute To Another Record Quarter

HAMILTON, Bermuda, Jan. 19 /PRNewswire/ -- Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC), a diversified manufacturing and service company, reported today that diluted earnings per share, before extraordinary item, for its first quarter ended December 31, 1998 were 61 cents per share (before acquisition related charges), a 42 percent increase over last year's 43 cents per share. Income before acquisition related charges and extraordinary item rose to $401.6 million, an increase of 52 percent over last year's $265.0 million. Sales for the quarter rose 28 percent to $3.82 billion compared with last year's $2.99 billion. Last year's results have been restated to reflect the merger with U.S. Surgical, which was accounted for as a pooling of interests, and are before non-recurring charges and extraordinary item. After giving effect to acquisition related and other non-recurring charges, loss per share was 4 cents in 1998 compared to diluted earnings per share of 41 cents in 1997.

"Strong organic growth across each of our four business segments and all geographies drove Tyco's record performance in the first quarter," said L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "We remain on track to meet our year-end goals of record revenues, earnings and cash flows. Additionally, the acquisition of AMP, which will close in late March, will further strengthen our business mix and immediately add to earnings per share."

HEALTHCARE AND SPECIALTY PRODUCTS

Quarterly earnings at Tyco's Healthcare and Specialty Products group grew 74 percent to $273.8 million, versus the $157.3 million reached a year ago. Sales grew to $1.34 billion versus last year's $979.1 million. Synergies and cost savings associated with the integration of U.S. Surgical and Graphic Controls into the Tyco Healthcare Group contributed to strong operating margins this quarter, and the Company remains excited about the long-term opportunities these acquisitions provide. Although Tyco Plastics' sales reflect the impact of lower raw material pricing as compared to last year, margins improved as unit volume continues to increase.

FIRE AND SECURITY SERVICES

At Tyco's Fire and Security Services group, earnings for the quarter increased 40 percent to $205.4 million versus $146.3 million last year. Sales reached $1.38 billion compared to $1.13 billion last year. Sales and operating margins improved in all geographic areas and demand continues to be strong across each of the service, contracting, and product business lines. Recurring revenues continue to increase to record levels and the pending acquisitions of the security division of Entergy and of Alarmguard will add to this performance in the future through additional accounts and strong recurring revenues.

FLOW CONTROL

First quarter earnings at the Tyco Flow Control group increased 30 percent to $93.5 million from $71.9 million last year. Sales were $652.5 million compared to the prior year's $550.0 million. Each of the operating units in this segment contributed to higher volume and operating margins this quarter. Demand continues to be strong in the United States, Europe and the Pacific for the Company's expanding valve product lines. Earth Tech and Mueller results demonstrated an ongoing demand for water and wastewater treatment and infrastructure related projects.

ELECTRICAL AND ELECTRONIC COMPONENTS

At Tyco's Electrical and Electronic Components group, first quarter earnings reached $95.0 million, a 33 percent increase, versus the $71.6 million in the same quarter last year. Sales rose to $440.0 million compared with $334.3 million in the prior year. Tyco Submarine Systems and the Tyco Printed Circuit Group showed strong growth this quarter. There are a significant number of opportunities for additional contracts in the undersea communications area. The Company is actively planning for growth in the industry by exploring multiple expansion possibilities in both the manufacturing and maintenance areas.

Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer and installer of fire protection systems, the largest provider of electronic security services, the largest manufacturer of flow control valves, and has strong leadership positions in disposable medical products, plastics and adhesives, electrical and electronic components and underwater telecommunications systems. The Company operates in more than 80 countries around the world and has expected 1999 revenue in excess of $17 billion.

FORWARD LOOKING INFORMATION

Certain statements in this release are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. In particular, any statements contained herein regarding the consummation and benefits of future acquisitions, as well as expectations with respect to future sales, operating efficiencies and product expansion, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward looking statements include, among other things, overall economic and business conditions, the demand for the Company's goods and services, competitive factors in the industries in which the Company competes, changes in government regulation; changes in tax requirements (including tax rate changes, new tax laws and revised tax law interpretations); interest rate fluctuations and other capital market conditions, including foreign currency rate fluctuations; economic and political conditions in international markets, including governmental changes and restrictions on the ability to transfer capital across borders; the ability to achieve anticipated synergies and other cost savings in connection with acquisitions; the timing, impact and other uncertainties of future acquisitions; and the Company's ability and its customers' and suppliers' ability to replace, modify or upgrade computer programs in order to adequately address the year 2000 issue.

TYCO INTERNATIONAL LTD.

RESULTS OF OPERATIONS (A) (B)

(in millions except per share data)

Three Months Ended
 12/31/98 12/31/97

 SALES $3,819.6 $2,990.0

 Income before income taxes $553.1 $392.2

 Income taxes (151.5) (127.2)

 INCOME BEFORE
 EXTRAORDINARY ITEM $401.6 $265.0

 EARNINGS PER SHARE:
 BASIC $0.62 $0.44
 DILUTED (C) $0.61 $0.43

 WEIGHTED AVERAGE COMMON SHARES:
 BASIC 646.7 602.9
 DILUTED 662.7 626.8


(A) Three months ended December 31, 1998 are before acquisition related

charges of $427.6 million, after tax, related to the U.S. Surgical

merger, which was accounted for as a pooling of interests.

Including these charges, loss before extraordinary item is $0.04 per

share. Three months ended December 31, 1998 are before

extraordinary losses of $2.4 million, after-tax, relating to the

early extinguishment of debt.

(B) Three months ended December 31, 1997 are restated for the U.S.

Surgical merger, and are before restructuring and non-recurring

items of $9.2 million, after-tax, or $0.01 per share. These charges

relate to restructuring actions taken by U.S. Surgical prior to its

merger with Tyco. The three months ended December 31, 1997 are

before extraordinary losses of $0.9 million, after-tax, relating to

the early extinguishment of debt.

(C) Earnings per share based on diluted shares assumes conversion of

LYONs notes. Accordingly, net interest expense of $1.2 million and

$2.2 million in the three months ended December 31, 1998 and 1997,

respectively, must be added back to income before extraordinary item

for computing diluted earnings per share.
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Publication:PR Newswire
Geographic Code:1USA
Date:Jan 19, 1999
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