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27
The following table sets forth revenue and operating
income and margins for the Fire and Security Services segment:
($ IN MILLIONS) FISCAL 2001 FISCAL 2000 FISCAL 1999
Revenue, before
accounting change $10,529.1 $8,506.6 $8,086.5
Operating income, before
certain (charges) credits and
accounting change $ 2,019.3 $1,464.0 $1,308.9
Operating margins, before
certain (charges) credits and
accounting change 19.2% 17.2% 16.2%
Revenue, after
accounting change $10,253.2 $8,506.6 $8,086.5
Operating income, after certain
(charges) credits and
accounting change $ 1,690.6 $1,475.2 $1,336.1
Operating margins, after certain
(charges) credits and
accounting change 16.5% 17.3% 16.5%
The 23.8% increase in revenue, before accounting change,
in Fiscal 2001 over Fiscal 2000 resulted primarily from higher
sales volume and increased service revenue in fire protection in
North America and Asia and higher revenues in the worldwide
electronic security services business. The increases were due pri-
marily to a higher volume of recurring service revenues and, to
a lesser extent, the effects of acquisitions. These acquisitions
included: Flow Control Technologies (“FCT”) in February 2000;
Simplex Time Recorder Co. in January 2001; Scott Technolo-
gies, Inc. (“Scott”) in May 2001; and the electronic security sys-
tems businesses of Cambridge Protection Industries, L.L.C.
(“SecurityLink”) in July 2001. Excluding the impact of these
acquisitions, revenue increased an estimated 9.9%.
The 5.2% increase in revenue in Fiscal 2000 over Fiscal 1999
resulted primarily from increased sales in the worldwide elec-
tronic security services business and higher sales volume in fire
protection operations in North America, Asia and Australia. The
increases were due primarily to a higher volume of recurring
service revenues and, to a lesser extent, the effects of acquisi-
tions in the security services business. These acquisitions
included: Entergy Security Corporation in January 1999;
Alarmguard Holdings in February 1999; Central Sprinkler
Corporation in August 1999; and FCT in February 2000. In
August 1999, we sold certain businesses within this segment,
including The Mueller Company and portions of Grinnell Supply
Sales and Manufacturing. Excluding the impact of these acquisi-
tions and divestitures, revenue increased an estimated 11.9%.
The 37.9% increase in operating income, before certain
(charges) credits and accounting change, in Fiscal 2001 over Fis-
cal 2000 was primarily due to acquisitions and increased service
volume in the fire protection business in North America and
Asia and worldwide security business. The increase in operating
margins, before certain (charges) credits and accounting
change, was primarily due to increased service revenues in fire
protection and improved margins at both the valve operations
and at Tyco Infrastructure (formerly known as Earth Tech).
Operating income and margins, after certain (charges)
credits and accounting change, include restructuring and other
non-recurring and impairment charges of $144.9 million, as well
as a decrease of $183.8 million relating to the adoption of SAB
101, in Fiscal 2001, as compared to a restructuring and other
non-recurring credit of $11.2 million in Fiscal 2000. As required
under SAB 101, we modified our revenue recognition policies
with respect to the installation of electronic security systems as
of the beginning of the fiscal year. See Consolidated Items
—
Cum ulative Effect of Accounting Changes.
The 11.8% increase in operating income, before certain
(charges) credits, in Fiscal 2000 over Fiscal 1999 reflects
increased service volume in security operations in the United
States and fire protection businesses in North America and Asia.
The increase in operating margins, before certain credits, was
due to increased sales volume in both security services and fire
protection offset slightly, in the case of security services, by
the costs of the reorganization of the security services’ dealer
program and internal sales force during the first two quarters
of Fiscal 2000.
In addition to the items discussed above, operating income
and margins, after certain (charges) credits, reflect restructur-
ing and other non-recurring credits of $11.2 million in Fiscal
2000 and $27.2 million in Fiscal 1999.
Healthcare and Specialty Products
Healthcare and Specialty Products include:
• a wide variety of disposable medical products, including
wound care and closure products, syringes and needles,
sutures and surgical staplers, products used for vascular
therapy and respiratory care, infant medical accessories,
incontinence products, anesthetic supplies, electrosurgical
instruments and laparoscopic instruments;
• polyethylene film and film products such as flexible plastic
packaging, plastic bags and sheeting, coated and laminated
packaging materials, tapes and adhesives, plastic garment
hangers and pipeline coatings for the oil, gas and water distri-
bution industries; and
• ADT Automotive’s auto redistribution services, which was
sold on October 6, 2000.