ADT 2006 Annual Report Download - page 4

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Fiscal 2006 was a year of transition and continued growth for
Tyco. Revenue rose more than 4 percent, from just over
$39 billion in fi scal 2005 to nearly $41 billion in fi scal 2006.
Net income also rose, from $3.0 billion to more than
$3.7 billion. Free cash fl ow for the year totaled $3.7 billion.
During 2006, the company continued to return excess
cash to shareholders, using $2.5 billion to repurchase 95 mil-
lion shares – representing 4.4 percent of diluted shares
outstanding. Tyco has repurchased nearly 220 million shares
or share equivalents since August of 2004 – a 10 percent
reduction of diluted shares outstanding from mid-2004
through the end of fi scal 2006.
Fiscal 2006 also marked signifi cant progress with
Tyco’s multi-year Operational Excellence efforts, which
include Six Sigma, strategic sourcing and working capital
management. Cumulative gross savings through 2006
amounts to $2.8 billion in Six Sigma and strategic sourc-
ing combined, with an additional $1.7 billion in working
capital improvements.
As we move into 2007, we are more convinced than
ever that the upcoming separation is the right move at the
right time for our company, and the separation is expected
to be achieved through a tax-free dividend of 100 percent
of the stock of Tyco Healthcare and Tyco Electronics. Our
balance sheet and cash fl ows are strong and scores of legacy
fi nancial and legal issues have been resolved. We are fortu-
nate to have a great mix of businesses with market-leading
positions. Looking forward, these companies are positioned
to be able to move faster and more aggressively – and ult-
imately create more value for share holders – by pursuing
their own growth strategies as independent entities. Along
with the great work that has been done by thousands of
employees around the globe to strengthen these companies
in the last few years, separating them now is the right way
to position them for sustained long-term growth.
The combination of Tyco Fire & Security and Engineered
Products & Services will continue to be known as Tyco
International. The company is a leading global provider
of electronic security, fi re and safety services and products,
valves and controls and other industrial products. The
company will also continue to manufacture galvanized
steel tubing and pipe products, as well as pre-wired armored
cable and fl exible conduit, for a wide variety of infrastruc-
ture markets around the world. With more than 115,000
employees, Tyco International will be organized into
major business segments including: ADT Worldwide, Fire
Protection Services, Flow Control, Safety Products and
Electrical and Metal Products.
Tyco International has a host of signifi cant competitive
advantages, including leading market positions and power-
ful, highly-recognized brands; a diverse portfolio of products
and services that are offered to a broad and well-established
customer base; stable, recurring revenue; and strong cash
fl ow. With a global footprint in more than 60 countries and
roughly half of its fi scal 2006 net revenue generated outside
the United States, Tyco International also enjoys the benefi ts
of size and scale that few competitors can match.
Tyco Electronics is a leading global provider of engineered
electronic components, network solutions and wireless
systems. With 2006 revenues of $12.7 billion, the company
CHAIRMAN’S LETTER
continued
NET REVENUE
BY SEGMENT
(In US$ Billions)
Electronics
Fire & Security
Healthcare
Engineered Products
& Services
Total = $41.0 Billion
$9.6
$11.7
$7.0
$12.7
TOTAL NET REVENUE
(In US$ Billions)
$38.0 $39.3 $41.0
2004 2005 2006
NET REVENUE
BY REGION
(In US$ Billions)
United States
Europe
Asia/Pacific
Other Americas
Total = $41.0 Billion
$7.0
$20.0
$11.5
$2.5