Switzerland | 98-0390500 | |
(Jurisdiction of Incorporation) | (IRS Employer Identification Number) |
Exhibit No. | Description | |
99.1 | Press Release dated January 31, 2014 regarding Tyco’s first quarter results. | |
TYCO INTERNATIONAL LTD. | ||
(Registrant) | ||
By: | /s/ SAM ELDESSOUKY | |
Sam Eldessouky | ||
Senior Vice President, Controller and Chief Accounting Officer | ||
Date: January 31, 2014 |
Investor Relations Contacts: | Media Contact: | ||
Antonella Franzen | Stephen Wasdick | ||
+1-609-720-4665 | +1-609-806-2262 | ||
afranzen@tyco.com | swasdick@tyco.com | ||
Leila Peters | |||
+1-609-720-4545 | |||
lpeters@tyco.com |
• | Revenue of $2.65 billion increases 2%, with 1.5% organic growth |
• | Before special items, segment operating income increases 9% and operating margin improves 80 basis points to 13.3% |
• | Diluted EPS from continuing operations before special items increases 15% |
• | The Company completes the acquisition of Westfire, Inc. |
• | The Company repurchases 6.6 million shares for $250 million |
Q1 2014 | Q1 2013 | % Change | ||||||||||
Revenue | $ | 2,647 | $ | 2,600 | 2 | % | ||||||
Segment Operating Income | $ | 328 | $ | 296 | 11 | % | ||||||
Operating Income | $ | 374 | $ | 235 | 59 | % | ||||||
Income from Continuing Operations | $ | 270 | $ | 159 | 70 | % | ||||||
Diluted EPS from Continuing Operations | $ | 0.57 | $ | 0.34 | 68 | % | ||||||
Special Items | $ | 0.10 | $ | (0.07 | ) | |||||||
Segment Operating Income Before Special Items | $ | 352 | $ | 324 | 9 | % | ||||||
Income from Continuing Ops Before Special Items | $ | 222 | $ | 195 | 14 | % | ||||||
Diluted EPS from Continuing Ops Before Special Items | $ | 0.47 | $ | 0.41 | 15 | % |
Q1 2014 | Q1 2013 | % Change | ||||||||||
Revenue | $ | 957 | $ | 976 | (2 | )% | ||||||
Operating Income | $ | 117 | $ | 108 | 8 | % | ||||||
Operating Margin | 12.2 | % | 11.1 | % | ||||||||
Special Items | $ | (12 | ) | $ | (12 | ) | ||||||
Operating Income Before Special Items | $ | 129 | $ | 120 | 8 | % | ||||||
Operating Margin Before Special Items | 13.5 | % | 12.3 | % |
Q1 2014 | Q1 2013 | % Change | ||||||||||
Revenue | $ | 1,125 | $ | 1,090 | 3 | % | ||||||
Operating Income | $ | 125 | $ | 114 | 10 | % | ||||||
Operating Margin | 11.1 | % | 10.5 | % | ||||||||
Special Items | $ | (8 | ) | $ | (7 | ) | ||||||
Operating Income Before Special Items | $ | 133 | $ | 121 | 10 | % | ||||||
Operating Margin Before Special Items | 11.8 | % | 11.1 | % |
Q1 2014 | Q1 2013 | % Change | ||||||||||
Revenue | $ | 565 | $ | 534 | 6 | % | ||||||
Operating Income | $ | 86 | $ | 74 | 16 | % | ||||||
Operating Margin | 15.2 | % | 13.9 | % | ||||||||
Special Items | $ | (4 | ) | $ | (9 | ) | ||||||
Operating Income Before Special Items | $ | 90 | $ | 83 | 8 | % | ||||||
Operating Margin Before Special Items | 15.9 | % | 15.5 | % |
• | Cash from operating activities was $123 million and free cash flow was $24 million, which included a net cash outflow of $25 million primarily related to environmental, restructuring and separation activities partially offset by the settlement of a legacy matter. Adjusted free cash flow for the quarter was $49 million. The Company completed the quarter with $479 million in cash and cash equivalents. |
• | Corporate expense before special items was $55 million for the quarter. On a GAAP basis, there was a net benefit of $46 million in Corporate and Other, which included a non-cash benefit of $92 million related to the settlement of legacy litigation with former management and a net benefit of $16 million from the settlement of a legacy tax-related dispute with CIT, a former subsidiary of the Company. |
• | The tax rate before special items was 17.7% for the quarter. |
• | The Company repurchased 6.6 million shares for $250 million during the quarter under the existing share repurchase authority, of which $250 million remains. |
• | As previously disclosed, during the quarter the company closed its acquisition of Westfire, Inc., a leading fire installation and services business in the mining and special hazard verticals in the United States, Chile and Peru, which is expected to generate approximately $80 million in revenue in fiscal 2014. |
• | As previously disclosed, during the quarter the Company completed the sale of its Armourguard business in New Zealand and its fire and security business in Fiji, which together generated $80 million of revenue in fiscal 2013. |
• | At Tyco’s website: http://investors.tyco.com. |
• | By telephone: For both “listen-only” participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 857-9797. The telephone dial-in number for participants outside the United States is (517) 308-9262, passcode “Tyco”. |
• | An audio replay of the conference call will be available at 10:00 a.m. (EST) on January 31, 2014 and ending at 11:59 p.m. (EST) on February 7, 2014. The replay dial-in number for participants in the United States is (866) 357-4208. For participants outside the United States, the replay dial-in number is (203) 369-0124, passcode 3410. |
• | A webcast replay of the conference call will be available on the “Presentations & Webcasts” section of Tyco’s website: http://investors.tyco.com. |
Quarters Ended | ||||||||
December 27, | December 28, | |||||||
2013 | 2012 | |||||||
Revenue from product sales | $ | 1,493 | $ | 1,443 | ||||
Service revenue | 1,154 | 1,157 | ||||||
Net revenue | 2,647 | 2,600 | ||||||
Cost of product sales | 1,023 | 1,004 | ||||||
Cost of services | 648 | 664 | ||||||
Selling, general and administrative expenses | 599 | 682 | ||||||
Separation costs | — | 5 | ||||||
Restructuring and asset impairment charges, net | 3 | 10 | ||||||
Operating income | 374 | 235 | ||||||
Interest income | 3 | 4 | ||||||
Interest expense | (24 | ) | (24 | ) | ||||
Other expense, net | (1 | ) | (9 | ) | ||||
Income from continuing operations before income taxes | 352 | 206 | ||||||
Income tax expense | (76 | ) | (39 | ) | ||||
Equity loss in earnings of unconsolidated subsidiaries | (4 | ) | (6 | ) | ||||
Income from continuing operations | 272 | 161 | ||||||
Income from discontinued operations, net of income taxes | — | 4 | ||||||
Net income | 272 | 165 | ||||||
Less: noncontrolling interest in subsidiaries net income | 2 | 2 | ||||||
Net income attributable to Tyco common shareholders | $ | 270 | $ | 163 | ||||
Amounts attributable to Tyco common shareholders: | ||||||||
Income from continuing operations | $ | 270 | $ | 159 | ||||
Income from discontinued operations | — | 4 | ||||||
Net income attributable to Tyco common shareholders | $ | 270 | $ | 163 | ||||
Basic earnings per share attributable to Tyco common shareholders: | ||||||||
Income from continuing operations | $ | 0.58 | $ | 0.34 | ||||
Income from discontinued operations | — | 0.01 | ||||||
Net income attributable to Tyco common shareholders | $ | 0.58 | $ | 0.35 | ||||
Diluted earnings per share attributable to Tyco common shareholders: | ||||||||
Income from continuing operations | $ | 0.57 | $ | 0.34 | ||||
Income from discontinued operations | — | — | ||||||
Net income attributable to Tyco common shareholders | $ | 0.57 | $ | 0.34 | ||||
Weighted average number of shares outstanding: | ||||||||
Basic | 464 | 466 | ||||||
Diluted | 471 | 473 |
Quarters Ended | ||||||||||||||
December 27, 2013 | December 28, 2012 | |||||||||||||
Net Revenue | ||||||||||||||
NA Installation & Services | $ | 957 | $ | 976 | ||||||||||
ROW Installation & Services | 1,125 | 1,090 | ||||||||||||
Global Products | 565 | 534 | ||||||||||||
Total Net Revenue | $ | 2,647 | $ | 2,600 | ||||||||||
Operating Income and Margin | ||||||||||||||
NA Installation & Services | $ | 117 | 12.2 | % | $ | 108 | 11.1 | % | ||||||
ROW Installation & Services | 125 | 11.1 | % | 114 | 10.5 | % | ||||||||
Global Products | 86 | 15.2 | % | 74 | 13.9 | % | ||||||||
Corporate and Other | 46 | N/M | (61 | ) | N/M | |||||||||
Operating Income and Margin | $ | 374 | 14.1 | % | $ | 235 | 9.0 | % |
December 27, 2013 | September 27, 2013 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 479 | $ | 563 | ||||
Accounts receivable, net | 1,725 | 1,738 | ||||||
Inventories | 685 | 655 | ||||||
Prepaid expenses and other current assets | 864 | 857 | ||||||
Deferred income taxes | 254 | 254 | ||||||
Total Current Assets | 4,007 | 4,067 | ||||||
Property, plant and equipment, net | 1,678 | 1,677 | ||||||
Goodwill | 4,528 | 4,519 | ||||||
Intangible assets, net | 806 | 804 | ||||||
Other assets | 994 | 1,109 | ||||||
Total Assets | $ | 12,013 | $ | 12,176 | ||||
Liabilities and Equity | ||||||||
Current Liabilities: | ||||||||
Loans payable and current maturities of long-term debt | $ | 180 | $ | 20 | ||||
Accounts payable | 838 | 899 | ||||||
Accrued and other current liabilities | 1,777 | 1,910 | ||||||
Deferred revenue | 368 | 402 | ||||||
Total Current Liabilities | 3,163 | 3,231 | ||||||
Long-term debt | 1,443 | 1,443 | ||||||
Deferred revenue | 392 | 400 | ||||||
Other liabilities | 1,849 | 1,969 | ||||||
Total Liabilities | 6,847 | 7,043 | ||||||
Redeemable noncontrolling interest | 12 | 12 | ||||||
Total Tyco shareholders' equity | 5,130 | 5,098 | ||||||
Nonredeemable noncontrolling interest | 24 | 23 | ||||||
Total Equity | 5,154 | 5,121 | ||||||
Total Liabilities, Redeemable Noncontrolling Interest and Equity | $ | 12,013 | $ | 12,176 |
For the Quarters Ended | ||||||||
December 27, | December 28, | |||||||
2013 | 2012 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income attributable to Tyco common shareholders | $ | 270 | $ | 163 | ||||
Noncontrolling interest in subsidiaries net income | 2 | 2 | ||||||
Income from discontinued operations, net of income taxes | — | (4 | ) | |||||
Income from continuing operations | 272 | 161 | ||||||
Adjustments to reconcile net cash provided by operating activities: | ||||||||
Depreciation and amortization | 106 | 105 | ||||||
Non-cash compensation expense | 15 | 14 | ||||||
Deferred income taxes | 57 | 10 | ||||||
Provision for losses on accounts receivable and inventory | 11 | 18 | ||||||
Legacy legal matters | (92 | ) | — | |||||
Other non-cash items | 16 | 6 | ||||||
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | ||||||||
Accounts receivable, net | 14 | (9 | ) | |||||
Contracts in progress | 13 | (2 | ) | |||||
Inventories | (32 | ) | (29 | ) | ||||
Prepaid expenses and other current assets | (59 | ) | 31 | |||||
Accounts payable | (44 | ) | (61 | ) | ||||
Accrued and other liabilities | (108 | ) | (228 | ) | ||||
Deferred revenue | (41 | ) | (47 | ) | ||||
Other | (5 | ) | (8 | ) | ||||
Net cash provided by (used in) operating activities | 123 | (39 | ) | |||||
Net cash provided by discontinued operating activities | — | 4 | ||||||
Cash Flows From Investing Activities: | ||||||||
Capital expenditures | (92 | ) | (90 | ) | ||||
Proceeds from disposal of assets | 4 | 3 | ||||||
Acquisition of businesses, net of cash acquired | (54 | ) | (23 | ) | ||||
Acquisition of dealer generated customer accounts and bulk account purchases | (11 | ) | (6 | ) | ||||
Sales and maturities of investments | 112 | 11 | ||||||
Purchases of investments | (32 | ) | (91 | ) | ||||
Other | 6 | 8 | ||||||
Net cash used in investing activities | (67 | ) | (188 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from issuance of short-term debt | 310 | — | ||||||
Repayment of short-term debt | (150 | ) | — | |||||
Proceeds from exercise of share options | 40 | 46 | ||||||
Dividends paid | (74 | ) | (70 | ) | ||||
Repurchase of common shares by treasury | (250 | ) | (50 | ) | ||||
Transfer to discontinued operations | — | (29 | ) | |||||
Other | (9 | ) | (16 | ) | ||||
Net cash used in financing activities | (133 | ) | (119 | ) | ||||
Net cash provided by discontinued financing activities | — | 29 | ||||||
Effect of currency translation on cash | (7 | ) | 3 | |||||
Net decrease in cash and cash equivalents | (84 | ) | (310 | ) | ||||
Less: net increase in cash and cash equivalents related to discontinued operations | — | 33 | ||||||
Cash and cash equivalents at beginning of period | 563 | 844 | ||||||
Cash and cash equivalents at end of period | $ | 479 | $ | 501 | ||||
Reconciliation to "Free Cash Flow": | ||||||||
Net cash provided by (used in) operating activities | $ | 123 | $ | (39 | ) | |||
Capital expenditures, net | (88 | ) | (87 | ) | ||||
Acquisition of dealer generated customer accounts and bulk account purchases | (11 | ) | (6 | ) | ||||
Purchase accounting and holdback liabilities | — | (1 | ) | |||||
Free Cash Flow | $ | 24 | $ | (133 | ) | |||
Reconciliation to "Adjusted Free Cash Flow": | ||||||||
CIT settlement | $ | (60 | ) | $ | — | |||
IRS litigation costs | 1 | — | ||||||
Separation costs | 22 | 100 | ||||||
Restructuring and repositioning costs | 29 | 19 | ||||||
Environmental remediation payments | 31 | 10 | ||||||
Legal settlements | — | 33 | ||||||
Net asbestos (recoveries) / payments | 3 | (58 | ) | |||||
Cash (receipt) / payment from Covidien/TE Connectivity | (1 | ) | (5 | ) | ||||
Special Items | $ | 25 | $ | 99 | ||||
Adjusted Free Cash Flow | $ | 49 | $ | (34 | ) |
Quarter Ended December 27, 2013 | |||||||||||||||||||||||||||||||||||||||||||
Base Year | |||||||||||||||||||||||||||||||||||||||||||
Net Revenue for the Quarter Ended December 28, 2012 | Adjustments | Adjusted Fiscal 2013 Base Revenue | Net Revenue for the Quarter Ended December 27, 2013 | ||||||||||||||||||||||||||||||||||||||||
Divestitures / Other (2) | Foreign Currency | Acquisitions | Organic Revenue (1) | ||||||||||||||||||||||||||||||||||||||||
NA Installation and Services | $ | 976 | $ | (18 | ) | (1.8 | )% | $ | 958 | $ | (7 | ) | (0.7 | )% | $ | 4 | 0.4 | % | $ | 2 | 0.2 | % | $ | 957 | (1.9 | )% | |||||||||||||||||
ROW Installation and Services | 1,090 | (7 | ) | (0.6 | )% | 1,083 | (20 | ) | (1.8 | )% | 38 | 3.5 | % | 24 | 2.2 | % | 1,125 | 3.2 | % | ||||||||||||||||||||||||
Global Products | 534 | 1 | 0.2 | % | 535 | (3 | ) | (0.6 | )% | 20 | 3.7 | % | 13 | 2.4 | % | 565 | 5.8 | % | |||||||||||||||||||||||||
Total Net Revenue | $ | 2,600 | $ | (24 | ) | (0.9 | )% | $ | 2,576 | $ | (30 | ) | (1.2 | )% | $ | 62 | 2.4 | % | $ | 39 | 1.5 | % | $ | 2,647 | 1.8 | % |
(1) Organic revenue growth percentage based on adjusted fiscal 2013 base revenue. | |
(2)Amounts include the transfer of a business from NA Installation and Services to Global Products. |
Quarter Ended Dec. 27, 2013 | Quarter Ended Dec. 28, 2012 | |||||||
Diluted EPS from Continuing Operations Attributable to Tyco Shareholders (GAAP) | $ | 0.57 | $ | 0.34 | ||||
expense / (benefit) | ||||||||
Restructuring and repositioning activities | 0.01 | 0.01 | ||||||
Separation costs included in SG&A | 0.02 | 0.01 | ||||||
Environmental remediation | — | 0.01 | ||||||
Loss on sale of investment | 0.01 | — | ||||||
CIT settlement | (0.03 | ) | — | |||||
Settlement with former management | (0.11 | ) | — | |||||
Separation costs | — | 0.01 | ||||||
Tax items | — | 0.01 | ||||||
2012 Tax Sharing Agreement | — | 0.02 | ||||||
Total Before Special Items | $ | 0.47 | $ | 0.41 |
Segments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NA Installation & Services | ROW Installation & Services | Global Products | Segment Revenue | Corporate and Other | Total Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue (GAAP) | $957 | $1,125 | $565 | $2,647 | $— | $2,647 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NA Installation & Services | Margin | ROW Installation & Services | Margin | Global Products | Margin | Segment Operating Income | Margin | Corporate and Other | Margin | Total Operating Income | Margin | Interest (Expense), net | Other (Expense), net | Income Tax (Expense) | Equity in earnings of unconsolidated subsidiaries | Noncontrolling Interest | Income from Continuing Operations Attributable to Tyco Shareholders | Diluted EPS from Continuing Operations Attributable to Tyco Shareholders | ||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income (GAAP) | $117 | 12.2 | % | $125 | 11.1 | % | $86 | 15.2 | % | $328 | 12.4 | % | $46 | N/M | $374 | 14.1 | % | ($21 | ) | ($1 | ) | ($76 | ) | ($4 | ) | ($2 | ) | $270 | $0.57 | |||||||||||||||||||||||||||||||||||||||
Restructuring and repositioning activities | (2 | ) | 4 | 2 | 7 | 9 | (2 | ) | 7 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Separation costs included in SG&A | 14 | 14 | 1 | 15 | (6 | ) | 9 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Gains) / losses on divestitures, net | (3 | ) | (3 | ) | (3 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition / integration costs | 1 | 1 | 1 | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement with former management | (92 | ) | (92 | ) | 36 | (56 | ) | (0.11 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asbestos | 1 | 1 | (1 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IRS litigation costs | 1 | 1 | 1 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CIT settlement | (16 | ) | (16 | ) | (16 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss on sale of investment | 7 | 7 | 7 | 7 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 Tax Sharing Agreement | 2 | 2 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Before Special Items | $129 | 13.5 | % | $133 | 11.8 | % | $90 | 15.9 | % | $352 | 13.3 | % | ($55 | ) | N/M | $297 | 11.2 | % | ($21 | ) | $1 | ($49 | ) | ($4 | ) | ($2 | ) | $222 | $0.47 | |||||||||||||||||||||||||||||||||||||||
Diluted Share Outstanding | 471 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted Shares Outstanding - Before Special Items | 471 |
Segments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NA Installation & Services | ROW Installation & Services | Global Products | Segment Revenue | Corporate and Other | Total Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue (GAAP) | $976 | $1,090 | $534 | $2,600 | $— | $2,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NA Installation & Services | Margin | ROW Installation & Services | Margin | Global Products | Margin | Segment Operating Income | Margin | Corporate and Other | Margin | Total Operating Income | Margin | Interest (Expense), net | Other (Expense), net | Income Tax (Expense) | Equity in earnings of unconsolidated subsidiaries | Noncontrolling Interest | Income from Continuing Operations Attributable to Tyco Shareholders | Diluted EPS from Continuing Operations Attributable to Tyco Shareholders | ||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income (GAAP) | $108 | 11.1 | % | $114 | 10.5 | % | $74 | 13.9 | % | $296 | 11.4 | % | ($61 | ) | N/M | $235 | 9.0 | % | ($20 | ) | ($9 | ) | ($39 | ) | ($6 | ) | ($2 | ) | $159 | $0.34 | ||||||||||||||||||||||||||||||||||||||
Restructuring, net | 7 | 2 | 9 | 1 | 10 | (2 | ) | 8 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Separation costs included in SG&A | 12 | 12 | 1 | 13 | (5 | ) | 8 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Gains) / losses on divestitures, net | (3 | ) | (3 | ) | (3 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition / integration costs | 1 | 1 | 1 | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asbestos | (1 | ) | (1 | ) | (1 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental remediation | 6 | 6 | 6 | (2 | ) | 4 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Separation costs | 5 | 5 | 5 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax items | 4 | 4 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 Tax Sharing Agreement | 10 | 10 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Before Special Items | $120 | 12.3 | % | $121 | 11.1 | % | $83 | 15.5 | % | $324 | 12.5 | % | ($58 | ) | N/M | $266 | 10.2 | % | ($20 | ) | $1 | ($44 | ) | ($6 | ) | ($2 | ) | $195 | $0.41 | |||||||||||||||||||||||||||||||||||||||
Diluted Shares Outstanding | 473 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted Shares Outstanding - Before Special Items | 473 |