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Electronics Production | November 15, 2006

Tyco is launching restructuring program

To further improve its operating efficiency beginning in the first fiscal quarter of 2007, Tyco is launching a restructuring program and expects to incur up to $600 million of charges of which $450 million are expected to be cash.
This program includes projects in all four business segments, as well as corporate. The $600 million Tyco-wide program includes projects costing about $270 million at Fire & Security; $150 million at Healthcare; $80 million at Engineered Products & Services; $60 million at Electronics; and $40 million at corporate. The company anticipates incurring approximately $500 million of the total program charges in fiscal 2007, with the remaining $100 million in fiscal 2008. Cash payments for the program are expected to be $250 million in fiscal 2007 and $200 million in fiscal 2008. Cash savings from these activities are estimated at $50 million in 2007 and $200 million in 2008, resulting in the program becoming cash neutral in 2008. The company expects to reach full-year run rate savings of approximately $300 million by 2009.

Tyco has announced that revenue in the fourth quarter totaled $10.8 billion, with organic revenue growth of 7 percent. The company generated cash flow from operating activities of $2.4 billion and free cash flow of $1.9 billion in the quarter, which included $65 million in cash payments for separation-related costs.

During the fourth quarter, Tyco used $625 million in cash to buy back 24 million shares. For the full year, Tyco has used $2.5 billion to repurchase 95 million shares, representing 4.4 percent of diluted shares outstanding.

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