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Tyco's profit falls amid debt payments

/ Source: The Associated Press

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.