posted a fourth-quarter loss and said it would slash 7,200 jobs as its long-running restructuring intensifies.
The troubled Bermuda-based conglomerate, whose name has been much in the news recently as its disgraced former CEO Dennis Kozlowski stands trial for allegedly looting the company, also provided financial guidance that was largely in line with Wall Street's estimates. Tyco shares slipped fractionally in premarket trading Tuesday.
The restructuring plan represents the latest effort by Tyco's new management to distance the company from the excesses of previous management. Kozlowski built the company into a massive and far-flung conglomerate during a heady rush of acquisitions in the 1990s. But when his team was brought down in a scandal that ranged from excessive corporate perks to tax charges, investors fled the stock. The company has since expended much effort slashing debt and trimming noncore businesses in a process that took a new twist today.
For the fourth quarter ended Sept. 30, Tyco posted a loss of $297.1 million, or 15 cents a share, on revenue of $9.5 billion. That compares with a year-ago loss of $1.4 billion, or 72 cents a share, on sales of $9.4 billion.
The latest quarter included $1.2 billion, or 49 cents a share, in charges related to the company's expanding plan to sell assets and narrow its focus. The lion's share of the charges was related to writedowns at the company's money-losing Tyco Global Network undersea fiber operation, which Tyco says it intends to sell. Excluding those costs, Tyco earned 34 cents a share, a penny better than analysts' estimates, according to Thomson First Call.
The company said it produced cash from operating activities of $1.8 billion in the latest quarter and free cash flow of $1.4 billion, up from $900 million a year ago. Investors have been keeping a close watch on those figures to determine whether Tyco is bringing in enough cash to keep paying down its massive debt burden.
Tyco said it would also leave some 50 other businesses accounting for about 6% of its revenue base. Excluding Tyco Global Network, the company expects to take in $400 million in proceeds from the divestiture program, generating a pretax loss of $250 million to $750 million.
The company said it would close 219 manufacturing, sales, distribution and other facilities under the program, cutting its 200,000-strong workforce by about 7,200. The bulk of the plants to be closed, 184, are in the company's Fire & Security unit. Tyco expects to take about $400 million in 2004 charges for the restructuring, generating $230 million in annual savings by 2005.
For fiscal 2004, Tyco projected earnings of $1.42 to $1.52 a share, excluding charges. For the first quarter of fiscal 2004, Tyco forecast earnings of 30 cents to 32 cents a share before charges, representing a 7%-14% gain from a year ago.
The company said it expects cash from operating activities and free cash flow in 2004 to exceed the levels achieved in 2003, which were $5.4 billion and $3.2 billion, respectively.
Since the summer of 2002 Tyco has operated under new management led by former
chief Ed Breen. Kozlowski and his associate, former financial chief Mark Swartz, have since been indicted for allegedly looting the company of some $600 million. Kozlowski's trial is under way in Manhattan.