Tyco Shareholders Approve Proposals at Annual General Meeting
Chairman and CEO L. Dennis Kozlowski Outlines Robust Future Growth Prospects
Tyco Announces Authorization of 20 Million Share Buy-Back
HAMILTON, Bermuda, Nov. 3 /PRNewswire/ -- The shareholders of Tyco International Ltd. (NYSE: TYC; LSE: TYI; BSX: TYC), a diversified manufacturing and service company, approved four proposals at the Tyco Annual General Meeting today. The approved proposals included the reelection of the Board of Directors, the reappointment of PricewaterhouseCoopers as the company's auditors, affirmation of Tyco's long-standing policy that a majority of the Board of Directors be composed of independent directors and the request that any future shareholder rights plan receive approval of shareholders.
During the annual shareholder meeting today, L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer, advised the company's shareholders that, ''Tyco has just completed a record year in terms of cash flow, earnings and sales. The fundamentals of our business are excellent and we continue to increase market share and margins in each of our four businesses.''
''In light of this performance -- and particularly in light of the strong free cash flow Tyco's operating businesses continue to generate -- we believe the recent drop in our share price was unwarranted. In fact, Tyco's Directors have elected to take over 90% of their current year cash compensation in the form of Tyco shares and/or options at current market prices.
''Based on our near and long-term outlook for strength of our cash flow, sales and earnings, Tyco today and its prospects for the future are as strong as they have ever been. We are comfortable with consensus analyst estimates for the current quarter and the current fiscal year, ending in September 2000. More important is the confidence we can sustain attractive growth:
* Our free cash flow, after all restructuring spending, will exceed
$3 billion for this current fiscal year. Cash flow generation is
important because it is a direct reflection of the quality of the
earnings of the company: the greater the cash flow is as a percent of
net income, the better the indication that earnings are more directly
related to the results of operations. Cash is also important to the
future health of the company for reinvestment into areas of great growth
potential and for acquisitions that can enhance our current operations.
* Our organic sales growth, that is, growth before acquisitions, is
sustainable due to our clear leadership position in all of our markets,
market fragmentation and our low cost position. The greater emphasis on
the service component of our businesses and the recurring nature of that
revenue enhances the sustainability of this growth.
* At the core of our earnings growth is long-term sustainable earnings
growth of 20%, derived from our time-tested process for driving
increased revenue and margin growth. This process is proven, replicable
across businesses and within new acquisitions, and is capable of
providing continuous margin improvements. Its elements include:
eliminating overhead and burdening bureaucracy; exploiting the operating
leverage that comes from increased size; bringing to bear a relentless
focus on costs, productivity improvements and quality; and, increasing
growth in the service components of our business with their associated
higher margins. Where growth, margin improvement and cost reduction are
concerned, Tyco has no finish line. For years, we have demonstrated the
success of this process across all of our businesses.
* Acquisitions are additive to this core earnings. Adopting a Tyco cost
structure provides benefits in the first several years following an
acquisitions, then continued implementation of Tyco's margin improvement
disciplines drive further expansion over time. The markets in which we
operate provide countless opportunities for acquisitions of strategic
product line extensions and our free cash flow, strong balance sheet and
divestitures of non-core businesses provide the resources. This
acquisition strategy remains unchanged.
* Underlying Tyco's success is the strong secular growth in each of our
business areas: demographics and long-term contracts in the healthcare
area; new customer accounts and recurring revenue in the fire and
security industries; the focus on the service component of our flow
control business; explosive demand fueled by the internet for undersea
fiber optic cable installation and maintenance; and the increased use of
electronics in all levels of industrial and consumer products for our
electronics group.
''In sum, Tyco has never been stronger in terms of its ability to generate free cash flow, its business fundamentals or its long-term prospects.''
Mr. Kozlowski continued, ''Over the past few weeks, the strength of these fundamentals has been obscured by meritless allegations concerning our accounting and disclosure practices, primarily as they relate to acquisitions. These allegations are false and the concerns they have caused are unfounded. All of our accounting and disclosure practices are appropriate and in full compliance with generally accepted accounting principles (GAAP) and U.S. Securities and Exchange Commission (SEC) regulations.
''On Friday, October 22, 1999, Tyco's senior management provided a detailed review of the company's accounting and financial reporting to Wall Street analysts and shareholders and responded to every question raised. This presentation was well-attended, was telecast to ten remote locations and was accessible by teleconference. A video replay of this call will be available next week on our web site at www.tyco.com.
''In addition to what Tyco has said, respected outside entities have conducted extensive reviews of our accounting and disclosure practices and attested to their sufficiency and comprehensiveness:
* Our independent auditors, PricewaterhouseCoopers, have just completed
their fiscal year-end audit of Tyco, and even in the environment of
heightened marketplace focus on accounting matters, will issue an
unqualified opinion, dated October 21, 1999, that our financial
statements conform with GAAP and present fairly, in all material
respects, Tyco's financial position.
* In the recent past, the SEC has conducted numerous full reviews of Tyco,
including reviews in connection with the acquisition of U.S. Surgical
and AMP, and required no financial statement adjustments.
* Certified Public Accountants at major Wall Street investment firms
recently scrutinized our financial statements and raised no issues. The
Institutional Investor top-rated analyst in accounting and tax policy,
Pat McConnell of Bear Stearns, concluded that at Tyco there is 'No
reason to believe that there have been accounting irregularities.'
''Our auditors, the Wall Street analysts who cover Tyco -- and others who don't but who cover accounting -- the SEC and other serious people who have taken the time to study in detail Tyco's public financial statements, have come to the same conclusions.''
Tyco also announced today that its board of directors has approved a new 20 million share repurchase program. This is the maximum allowed under rules related to pooling accounting used in Tyco's merger with AMP. Under this program, the company is authorized to repurchase up to an additional 20 million of its outstanding common shares in the open market and through private transactions. The exact timing and amount of the repurchases will be subject to market conditions and other factors.
With respect to the share repurchase program, Mr. Kozlowski said, ''This program represents a very attractive use of our capital at a time when we believe our stock is significantly undervalued. It demonstrates our confidence in Tyco's long-term earnings power and our commitment to building shareholder value.''
Mr. Kozlowski concluded his remarks, stating, ''We are very excited about the future and are determined to continue building value for Tyco's shareholders.''
Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer and servicer of electrical and electronic components and undersea telecommunications systems, the world's largest manufacturer, installer, and provider of fire protection systems and electronic security services, has strong leadership positions in disposable medical products, plastics, and adhesives, and is the largest manufacturer of flow control valves. The Company operates in more than 80 countries around the world and has expected fiscal 2000 revenues in excess of $25 billion.
FORWARD LOOKING INFORMATION
Comments in this release concerning comfort with analyst estimates, sustainability of revenue and earnings growth, margin expansion, the ability to conduct further acquisitions and expected fiscal 2000 revenue are forward-looking statements, which are based on management's good faith expectations and belief concerning future developments. Actual results may materially differ from these expectations as a result of many factors, relevant examples of which are set forth in the ''Management Discussion and Analysis'' section of the Company's 1998 Annual Report to Shareholders and the Company's 1998 Annual Report on Form 10-K.
CONTACT:
J. Brad McGee
Tyco International (US) Inc.
Senior Vice President
(603) 778-9700
SOURCE: Tyco International Ltd.
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