Tyco to Cut 11,300 Jobs, Close Plants

Tyco International Ltd. said it’s cutting nearly 11,300 jobs while closing or consolidating nearly 300 plants in connection with acquisitions made during the previous and current fiscal years.

Tyco, one of the nation’s most aggressive corporate buyers, said in a regulatory filing that as of June 30, it already had eliminated 6,379 employees and closed or consolidated 58 plants from companies acquired during fiscal 2001.

Tyco relies on work force reductions and plant closings to squeeze efficiencies out of acquired companies while boosting cash flow.

Through the first nine months of its fiscal year ending Sept. 30, Tyco spent about $17.1 billion on acquisitions, according to the company’s quarterly filing with the Securities and Exchange Commission.

Based in Pembroke, Bermuda, with corporate headquarters in Exeter, N.H., Tyco makes everything from ADT burglar alarms and trash bags to surgical sutures and pain medicine.

It’s the biggest maker of electronic connectors, undersea fiber-optic cable, security and fire-prevention systems and industrial valves. It’s the second-biggest maker of disposable medical supplies, behind Johnson & Johnson.

The work force reductions include deeper-than-expected cuts in Tyco’s electronics division from companies acquired in fiscal year 2000, the filing stated. The revisions include the elimination of an additional 2,902 employees and the closure of 64 manufacturing plants and sales offices, Tyco said.

Tyco adjusted the number as it finalized integration plans of acquired electronics firms such as Thomas & Betts, AFC Cable Systems and Critchley Group. The changes resulted in purchase accounting liabilities of $118 million, Tyco said. A slowdown among computer makers and telecommunications firms has hurt Tyco’s electronics business after having a record year in fiscal 2000.

In connection with 2001 acquisitions that include health-care firm Mallinckrodt, financing arm CIT and Lucent Technologies’ power systems business, Tyco plans to cut 8,394 jobs and close or consolidate 225 plants. U.S. operations will bear the brunt of those reductions, Tyco said in its filing.

Tyco now has about 220,000 employees, with operations in about 80 countries.

Since becoming Tyco’s chief executive in 1992, Dennis Kozlowski has set a blistering pace to build an empire of companies resistant to recessionary pressures. He has spent about $60 billion on 120 major acquisitions in the areas of health care, security systems, electronics and lease financing.

Kozlowski buys only companies that add to earnings immediately.

Cash flow and debt also are important features of Tyco’s blueprint. During Tyco’s fiscal third quarter ended June 30, its cash flow, a closely watched measure of the underlying strength of earnings, was $1.5 billion, excluding operating cash from CIT and before the spending of $633 million on undersea cable unit Tycom.

Meanwhile, Tyco’s debt climbed to $18.6 billion at the end of June. That compared with $9.46 billion Sept. 30, 2000.

Separately, Tyco disclosed that one of its business units in Connecticut is the subject of a federal investigation on suspicion it violated U.S. pollution laws.

During the third quarter ended June 30, the U.S. attorney’s office in Connecticut told Tyco’s printed circuit group it was the target of a grand jury investigation concerning allegations that one or more of its plants violated the U.S. Clean Water Act.

The alleged violations relate to applicable permits, Tyco said in the SEC filing. The printed circuit group is cooperating with investigators, Tyco said.

Tyco shares fell 17 cents to $53.60 on the New York Stock Exchange. The stock rose more than fivefold in the five-year period ended July 31.