updated 2/1/2005 9:20:58 AM ET 2005-02-01T14:20:58

Conglomerate Tyco International Ltd. on Tuesday reported a 1.4 percent drop in its first-quarter profit as charges for early retirement of debt and for divestitures outweighed surging sales.

The maker of medical, engineered and electronic products said net income for its October-December quarter was $709 million, or 33 cents per share, down from $719 million, or 34 cents per share, in the year-ago quarter.

Excluding one-time charges for the divestitures and for reducing debt by $1.2 billion, Tyco posted earnings per share of 40 cents. The consensus forecast of analysts surveyed by Thomson First Call was 42 cents per share.

West Windsor-based Tyco, best known for its ADT Security Services business, said revenues increased about 10.5 percent to $10.1 billion from $9.7 billion a year earlier. The company reported sales increases in all five divisions, led by electronics and by engineered products and services.

“Our first-quarter results were in line with our expectations,” Ed Breen, chairman and chief executive officer, said in a prepared statement. “We remain focused on driving increased operating efficiencies and we’re investing for growth in our businesses.”

First-quarter Healthcare operating profit climbed 8 percent to $581 million, on revenue growth of 6 percent to $2.32 billion, driven by strong sales in the pharmaceutical and surgical businesses.

Engineered Products & Services operating profit rose 55 percent to $172 million, driven by improved pricing in electrical and medical products and increased margins at flow control. Revenue for the segment rose 9 percent to $1.51 billion.

Excluding charges on divestitures or early debt retirement, Tyco expects earnings of 45 cents to 47 cents a share for the second quarter and reiterated its guidance for earnings of $1.88 to $1.98 a share for the year. Analysts are looking for earnings of 47 cents a share in the second quarter and $1.96 a share for the year.

Tyco expects full-year cash from operating activities of about $7 billion and free cash flow in excess of $4.5 billion.

In addition, the company said it increased its quarterly dividend to 10 cents, eight times the previous quarterly dividend of 1.25 cents. Pay and record dates were not disclosed.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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