ADT 1999 Annual Report Download - page 67

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25. Tyco International Group S.A.
Tyco International Group S.A. (“TIG”), a wholly-owned subsidiary of
the Company, indirectly owns a substantial portion of the operating
subsidiaries of the Company. During Fiscal 1999 and Fiscal 1998, TIG
issued public debt securities (Note 4) which are fully and uncondition-
ally guaranteed by the Company. The Company has not included sep-
arate financial statements and footnotes for TIG because of the full
and unconditional guarantee by the Company and the Company’s
belief that such information is not material to holders of the debt secu-
rities. The following presents unaudited consolidated summary finan-
cial information for TIG and its subsidiaries, as if TIG and its current
organizational structure were in place for all periods presented.
September 30,
(in millions) 1999 1998
Total current assets $ 7,618.4 $ 6,639.5
Total non-current assets 24,008.4 12,090.0
Total current liabilities 6,845.1 5,519.5
Total non-current liabilities 10,553.9 6,401.5
Nine Months
Ended
Year Ended September 30,
September 30,
(in millions) 1999 1998 1997
Net sales $16,668.5 $13,535.3 $8,457.8
Gross profit 6,451.4 4,800.4 2,950.7
Income (loss) before
extraordinary items 631.7(1) 693.9(2) (642.2)(3)
Net income (loss)(4) 586.0 691.5 (700.5)
(1) Income before extraordinary items in Fiscal 1999 includes a credit of $15.0 million rep-
resenting a revision of estimates related to Tyco's 1997 restructuring and other non-recur-
ring accruals, and merger, restructuring and other non-recurring charges of $434.9 million
and charges for the impairment of long-lived assets of $76.0 million, primarily related to
the USSC merger.
(2) Income before extraordinary items in Fiscal 1998 includes non-recurring charges of
$80.5 million and restructuring charges of $12.0 million related to USSC's operations.
(3) Loss before extraordinary items in Fiscal 1997 includes charges related to merger,
restructuring and other non-recurring costs of $816.8 million and impairment of long-lived
assets of $148.4 million, primarily related to the mergers and integration of ADT, Former
Tyco, Keystone and Inbrand. Fiscal 1997 also includes a charge of $361.0 million for the
write-off of purchased in-process research and development costs and charges of $24.3
million for litigation and other related costs, and $5.8 million for restructuring charges
related to USSC's operations.
(4) Extraordinary items relate principally to the Company's debt tender offers and the write-
off of net unamortized deferred refinancing costs relating to the early extinguishment of debt.
26. Unsolicited Tender Offer and Defense
In August 1998, AlliedSignal Inc. announced its intention to commence
an offer to purchase all outstanding shares of AMP’s common stock.
This offer was rejected by the Board of Directors of AMP. AlliedSignal’s
offer was then amended twice in September 1998 to reduce the num-
ber of shares sought to be purchased. AMP incurred $15.9 million in
fees in defending against AlliedSignal’s bid, relating primarily to legal,
public relations and financial consulting costs. In April 1999, AlliedSig-
nal converted its AMP stock into Tyco common shares and reached a
settlement with Tyco and AMP, under which AlliedSignal paid $50 mil-
lion to AMP, and all parties released all claims against each other
related to AMP. This amount was recorded as a credit in the merger,
restructuring and other non-recurring charges line in the Consolidated
Statement of Operations for Fiscal 1999. See Note 16.
In addition, in September 1998, AMP’s Board of Directors autho-
rized the establishment of a Flexitrust, a grantor trust, to hold shares
of AMP’s common stock. AMP expected to sell to the Flexitrust an
aggregate of 25 million authorized but unissued shares of common
stock. AMP also announced its intention to commence a self-tender
offer for 30 million shares of its common stock. AMP estimated that the
total funds required to complete the self-tender would have been
approximately $1.7 billion, which AMP intended to source from a pro-
posed $2.6 billion credit facility.
In November 1998, AMP announced its intention to merge with
Tyco, and at that time AMP’s Board of Directors rescinded its autho-
rization for a self-tender offer and the establishment of the Flexitrust.
In addition, the debt intended to fund the self-tender was never used.
27. Subsequent Events (Unaudited)
On November 3, 1999, the Company announced that the Board of
Directors had authorized the Company to reacquire up to 20 million of
its common shares.
On November 22, 1999, the Company consummated its acquisi-
tion of AFC Cable Systems, Inc. (“AFC Cable”), a manufacturer of
prewired armor cable. AFC Cable shareholders received one Tyco
share for each share of AFC Cable. The Company issued approxi-
mately 12.8 million common shares in this transaction valued at
approximately $562.6 million. AFC Cable is being integrated within the
Company’s Flow Control Products segment. The Company is account-
ing for the acquisition as a purchase.
On November 23, 1999, the Company consummated its acquisi-
tion of Siemens Electromechanical Components GmbH & Co. KG
(“Siemens EC”) from Siemens AG for approximately $1.1 billion in
cash. Siemens EC, with annual sales of approximately $900.0 million,
is the world market leader for relays and one of the world’s leading
providers of components to the communications, automotive, con-
sumer and general industry sectors. Siemens EC is being integrated
within the Company’s Telecommunications and Electronics segment.
The Company is accounting for the acquisition as a purchase.