Subject: [NEXTEL-1] Tyco Earnings Fall Nearly 50 Percent

From: Marcel <[email-masked]>
Date: Wed, 22 Jan 2003 16:04:45 -0500

Tyco Earnings Fall Nearly 50 Percent

January 22, 2003 08:37:00 AM ET

NEW YORK (Reuters) - Industrial conglomerate Tyco International Ltd. (TYC) on Wednesday
said its quarterly earnings fell nearly 50 percent, as weak sales and higher costs ate
into profits across its business lines.

Tyco, which has been embroiled in controversy over the accounting practices of its former
management, also said its profit for the year would near the lower end of its previous
estimates -- and sharply lower than 2002's results -- because of its recent debt
refinancing activities and higher pension costs.

The Bermuda company, which makes products ranging from fire alarms to diapers, said its
fiscal first-quarter earnings fell to $634.5 million, or 32 cents per share, down from
nearly $1.2 billion, or 60 cents per share, the year before.

This met Wall Street's average expectation of 32 cents, based on estimates by research
firm Thomson First Call.

Tyco said it had cash flow of $482 million in the first-quarter, which was boosted by $200
million because employee bonuses were paid later than usual. This met their own
expectations, and the company said it still expects cash flow of $2.5 billion to $3
billion in fiscal 2003.

Earlier this month Tyco sold $4.5 billion of convertible bonds and obtained a $1.5 billion
unsecured bank credit line to avert a potential year-end cash-crunch that it had
previously said might reach $3.6 billion.

The company said that its revenue rose 4 percent to $8.9 billion in its first quarter,
from $8.6 billion a year earlier, driven largely by acquisitions throughout 2002. Profits
were down across its electronics, fire and security, healthcare and engineered products
divisions.

The electronics segment was particularly weak. Profit dropped 44 percent to $292.6 million
because of the battered telecommunications sector, which led to losses at its TyCom
undersea fiber-optic cable business.

At the very end of last year, Tyco said an investigation by its new management uncovered
$382 million in accounting mistakes, which it blamed on aggressive accounting by its
former management team.

Its former chief executive, Dennis Kozlowski, has been indicted on charges that he and
other former executives looted the firm of more than $600 million. He has plead not guilty
to the charges.

Looking ahead, the company said earnings for the fiscal year, ending in September, are
expected to be near the lower end of its previously announced range of $1.50 to $1.75 per
share. It attributed this in part to a greater number of diluted shares outstanding as a
result of its debt refinancing plus higher pension expenses.

Analysts' estimates already were clustered in the lower half of that range, and a few were
below it, according to Multex, another earnings tracking firm.

The average estimate is $1.54 per share, with estimates ranging from $1.43 to $1.65. In
fiscal 2002, it posted a large net loss after posting a booking a loss on the spin-off of
its former CIT financing unit, asset impairments and other items. Excluding those items,
it earned $1.79 per share from continuing operations.

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20030122&ID=2252483

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