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Tyco Reports Fourth Quarter 2015 Earnings From Continuing Operations BEFORE SPECIAL ITEMS OF $0.61 PER SHARE AND U.S. GAAP EARNINGS OF $0.19 PER SHARE

The following excerpt is from the company's SEC filing.

Segment operating margin before special items expands 150 basis points for the quarter to 15.7% and increases 50 basis points for the year to 14.4%

Diluted earnings per share (EPS) from continuing operations before special items increases 9% for the quarter and 12% for the year

Fiscal 2016 EPS before special items will now include restructuring and repositioning charges. Full-year guidance of $2.05 - $2.20 includes an estimated $0.14 - $0.19 per share, or $75 million to $100 million, of restructuring and repositioning charges. Including all restructuring and repositioning charges, full-year 2015 EPS before special items was $1.74, which reflects $0.49 per share, or $289 million, of restructuring and repositioning charges.

First quarter fiscal 2016 EPS before special items guidance of approximately $0.40 includes an estimated $0.04 per share, or $20 million, of restructuring and repositioning charges. This compares to $0.38 per share in the prior year quarter, adjusted to include $0.11 per share, or $75 million, of restructuring and repositioning charges.

(Income and EPS amounts are attributable to Tyco ordinary shareholders)

($ millions, except per-share amounts)

(All prior periods have been recast to reflect certain businesses as discontinued operations)

Q4 2015

Q4 2014

% Change

Revenue

10,332

Segment Operating Income

Operating Income (Loss)

Income (Loss) from Continuing Operations

Diluted EPS from Continuing Operations

Special Items

Segment Operating Income Before Special Items

Income from Continuing Ops Before Special Items

Diluted EPS from Continuing Ops Before Special Items

CORK, Ireland, Nov. 13, 2015 - Tyco (NYSE: TYC) today reported $0.19 in U.S. GAAP diluted earnings per share (EPS) from continuing operations for the fiscal fourth quarter of 2015 and diluted EPS from continuing operations before special items of $0.61. Revenue of $2.5 billion in the quarter decreased 7% versus the prior year, primarily due to a 7% negative impact of the stronger U.S. dollar against foreign currencies. Organic revenue declined 1% in the quarter. Acquisitions contributed 2 percentage points of growth, which was partially offset by the impact of divestitures.

For the full year, the company reported U.S. GAAP diluted EPS from continuing operations of $1.44 and diluted EPS from continuing operations before special items of $2.24. Revenue of $9.9 billion decreased 4%. Organic revenue growth for the year of 1% and acquisitions growth of 2% were more than offset by a 6% negative impact related to changes in foreign currency exchange rates and a 1% impact related to divestitures.

"We delivered solid operational results this year with strong performance in the fourth quarter, exhibiting effective execution on our productivity initiatives and cost actions amid a challenging macroeconomic environment," said Tyco Chief Executive Officer George R. Oliver. "The quarter's margin expansion reflects our progress with our transformation to an operating company. Despite slower growth in the industrial and energy-related end markets, we continue to see pockets of strength across the globe, led by U.S. non-residential construction markets. We anticipate these market conditions to continue in fiscal 2016.

"We continue to make investments to grow our business, both organically and through acquisitions, and deliver long-term value to shareholders. In fiscal 2015, we increased our investments in R&D and sales and marketing and completed about $575 million in acquisitions that we expect will contribute approximately $300 million to revenue on an annualized basis. We also repurchased over $400 million in shares during the year. As we enter the next phase of our transformation, we are well positioned to leverage our installed base and technology expertise to develop new solutions for customers and drive top-line growth,” Mr. Oliver added.

Organic revenue, free cash flow, adjusted free cash flow, operating income, segment operating income, and diluted EPS from continuing operations before special items are non-GAAP financial measures and are described below. For a reconciliation of these non-GAAP measures, see the attached tables. Additional schedules as well as fourth quarter review slides can be found in the Investor Relations section of Tyco’s website at

http://investors.tyco.com

SEGMENT RESULTS

The financial results presented in the tables below are in accordance with U.S. GAAP unless otherwise indicated. All dollar amounts are pre-tax and stated in millions. Certain businesses have been classified as discontinued operations. The revenue and operating income results shown below have been adjusted to reflect these changes in all periods presented. All comparisons are to the fiscal 2014 fourth quarter or full year unless otherwise indicated.

During the fourth quarter of fiscal 2015, the company changed the names of its North America Installation & Services and Rest of World Installation & Services segments to North America Integrated Solutions & Services and Rest of World Integrated Solutions & Services, respectively, to better reflect the company's focus on providing technology-enabled solutions that are tailored to customers' needs. No changes were made to the current segment structure or underlying financial data that comprise each segment as a result of the name changes, and there was no impact to previously disclosed segment information.

North America Integrated Solutions & Services

Operating Margin

Operating Margin Before Special Items

Revenue of $1.0 billion was consistent with the prior year, as organic growth was offset by the weakening of the Canadian dollar. Organic revenue growth of 2% was driven by 3% growth in service revenue and 1% growth in integrated solutions. Backlog of $2.5 billion increased 2% year over year and, in line with normal seasonality, decreased 1% on a quarter sequential basis, excluding the impact of foreign currency.

Operating income for the quarter was $158 million and the operating margin was 15.6%. Special items of $22 million consisted primarily of restructuring and repositioning charges. Before special items, operating income was $180 million and the operating margin improved 460 basis points to 17.8%. The prior year included a $10 million legal charge, which resulted in a 100 basis point tailwind to the year-over-year margin expansion. The current year benefited from discrete items, which favorably impacted the operating margin by 120 basis points. Underlying margin expansion of 240 basis points resulted from increased revenue, improved execution and the benefit of restructuring and productivity initiatives.

Revenue for the full year of $3.9 billion was flat with the prior year as 1% organic growth was fully offset by the weakening of the Canadian dollar. Operating income was $542 million and included $51 million of special charges. Before special items, operating income was $593 million and the operating margin improved 200 basis points to 15.3%.

Rest of World Integrated Solutions & Services

Revenue of $827 million decreased 18% compared to the prior year, driven by a 13% unfavorable impact from foreign currency exchange rates. Organic revenue declined 3%, reflecting a 7% decrease in integrated solutions, while service was consistent with the prior year. Additionally, revenue from acquisitions contributed 2%, which was more than offset by a decline related to a divestiture. Backlog of $1.9 billion increased 4% year over year and increased 2% on a quarter sequential basis, excluding the impact of foreign currency and the divestiture.

Operating income for the quarter was $56 million and the operating margin was 6.8%. Special items of $34 million consisted primarily of restructuring and repositioning charges. Before special items, operating income was $90 million and the operating margin was 10.9%. The operating margin declined 90 basis points year over year, as the benefit of restructuring and productivity initiatives was more than offset by the revenue decline and the contributing mix of geographies.

Revenue for the full year of $3.4 billion declined 12% compared to the prior year, driven by an 11% unfavorable impact from foreign currency exchange rates. A 2% benefit from acquisitions was more than offset by a 1% organic revenue decline and a 2% decline related to divestitures. Operating income was $243 million and included $121 million of special charges. Before special items, operating income was $364 million and the operating margin was 10.6%.

Global Products

Revenue of $666 million decreased 2% in the quarter, with a 2% decline in organic revenue. Acquisitions contributed 7 percentage points of growth, which was fully offset by the unfavorable impact of changes in foreign currency exchange rates.

Operating income for the quarter was $89 million and the operating margin was 13.4%. Special items of $35 million consisted primarily of restructuring and repositioning charges as well as a loss on a divestiture. Before special items, operating income...


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