Tyco International Ltd. Reports First Quarter Earnings from Continuing Operations Before Special Items of $0.75 Per Share and GAAP Earnings of $1.00 Per Share

SCHAFFHAUSEN, Switzerland, Jan. 27, 2011 /PRNewswire/ --

• Company reports 5% revenue increase with organic revenue growth of 4%
• Diluted EPS from continuing operations before special items increases 17%
• Operating margin before special items improves 130 basis points to 11.3%

Tyco International Ltd. (NYSE: TYC) today reported $1.00 in diluted earnings per share (EPS) from continuing operations for the fiscal first quarter of 2011 and diluted EPS from continuing operations before special items of $0.75 per share. Revenue in the quarter of $4.4 billion increased 5% versus the prior year with organic revenue growth of 4% including a 1 percentage point contribution from the Electrical & Metal Products business.

Tyco Chairman and Chief Executive Officer Ed Breen said, "Our first quarter results reflect continued improvement in our end markets which contributed to a stronger operating margin and helped us deliver a 17% increase in diluted earnings per share. We finished the quarter in a strong cash position which provides us the financial flexibility to continue to increase investments in R&D, fund our growth initiatives, and return excess cash to shareholders."

Organic revenue, free cash flow and operating income, operating margin, income and diluted EPS from continuing operations before special items are non-GAAP financial measures and are described below. Beginning with the first quarter of fiscal 2011, the company's organic growth / decline calculations incorporate an estimate of prior year reported revenue associated with the acquired entities that have been fully integrated within the first year, and exclude prior year revenues associated with entities divested within the past year. For a reconciliation of these non-GAAP measures, see the attached tables. Additional schedules as well as First Quarter Review slides can be found at www.tyco.com on the Investor Relations portion of Tyco's website.

SEGMENT RESULTS

The financial results presented in the tables below are in accordance with GAAP unless otherwise indicated. Effective in the first fiscal quarter of 2011, the company reorganized its reportable segments to more closely align with certain portfolio refinement actions taken in fiscal 2010. Under the new reporting structure, the former Safety Products segment has been split between the former ADT Worldwide and former Fire Protection Services segments. The new Tyco Security Solutions segment consists of the former ADT Worldwide segment and the portion of the Safety Products segment that manufactures electronic security products. The new Tyco Fire Protection segment consists of the former Fire Protection Services segment and the remaining portion of the Safety Products segment consisting of the fire suppression and life safety businesses. The revenue and operating income results shown below have been adjusted to reflect these changes. All dollar amounts are pre-tax and stated in millions. All comparisons are to the fiscal first quarter of 2010 unless otherwise indicated.

Revenue of $2.1 billion increased 10% in the quarter with organic revenue growth of 6%. Recurring revenue grew 4% organically on a global basis. Non-recurring revenue grew 7% with growth in all geographic regions led by increased volume in the North American commercial business.

Operating income was $347 million and the operating margin was 16.5%. Operating income before special items was $352 million and the operating margin improved 240 basis points to 16.7%. Increased volume in the commercial business, growth in the higher margin recurring revenue business and the continued benefit of restructuring activities drove the year-over-year operating margin improvement.

Revenue of $1.1 billion declined 1% in the quarter with organic revenue growth of 1.5%. Organic revenue growth of 1% in service and 9% in fire products more than offset the organic revenue decline of 3% in installation revenue. Backlog of $1.2 billion increased 1% on a quarter sequential basis, excluding the impact of foreign currency and the deconsolidation of a joint venture related to the adoption of a new accounting standard.

Operating income was $88 million and the operating margin was 8.0%. Special items of $39 million consisted of restructuring and losses on divestitures. Operating income before special items was $127 million and the operating margin was 11.6%. The 190 basis point margin improvement was driven by cost-containment and restructuring actions as well as business mix and selectivity of project work.

Revenue of $826 million declined 1% in the quarter with an organic revenue decline of 2%. Organic revenue growth of 8% in Thermal Controls was more than offset by an organic revenue decline of 5% in the Valves business and a 2% decline in Water. Excluding the impact of foreign currency, orders increased 7% year-over-year and backlog increased 3% to $1.5 billion on a quarter sequential basis.

Operating income was $100 million and the operating margin was 12.1%. Operating income includes a charge of $5 million on a project in a business retained from the 2008 divestiture of Earth Tech. The year-over-year impact of volume decline was almost fully offset by the benefits of cost-containment actions and previous restructuring activities.

Revenue of $347 million increased 17% in the quarter with organic revenue growth of 15%. The revenue growth was driven by higher selling prices for both steel and copper products.

Operating income was $7 million and the operating margin was 2.0%. Operating income before special items was $13 million and the operating margin was 3.7% as increased selling prices were more than offset by higher material costs.

On December 22, 2010, Tyco completed the sale of a majority interest in the Electrical and Metal Products business to an affiliate of Clayton, Dubilier and Rice, LLC. Tyco received cash proceeds of $713 million and recorded a gain of $259 million reported in corporate and other. The business now operates under the name Atkore International.

OTHER ITEMS

• Cash from operating activities was $246 million and free cash flow was negative $63 million, which included a cash outflow of $35 million primarily related to restructuring activiti