7,200 cuts: Tyco in major restructuring
Tyco International Ltd. will slash about 7,200 jobs as part of a restructuring plan and sell off 50 businesses, including its undersea fiber-optic network.
The businesses Tyco is exiting are in every segment of the diversified industrial conglomerate's operations, except plastics and adhesives. They had combined annualized revenues of $2.1 billion in fiscal year 2003, or about six percent of the company's total revenue base, Tyco said in a statement released in early November.
Based on revenue, more than half of the divestitures are in the company's fire and security segment.
Excluding the sale of the Tyco Global Network, also known as the TGN, Tyco expects at least $400 million in proceeds from the sell-off.
Tyco expects to record charges of about $400 million, including $280 million in cash, for the job cuts and for consolidating 219 locations. Most of the charges will be expensed in the current fiscal year, which ends in September 2004.
The company said it expects to save $230 million a year from the restructuring, starting in 2005.
Chairman and Chief Executive Officer Ed Breen said the divestiture and restructuring moves will improve profitability.
Tyco has been at the center of controversy recently because of the alleged crimes of its former chief executive and chief financial officer.
L. Dennis Kozlowski, Tyco's former CEO, and Mark Swartz, the former CFO, are on trial in Manhattan's state Supreme Court on charges of grand larceny and enterprise corruption for allegedly stealing some $600 million from Tyco. Each faces up to 30 years in prison if convicted.
Prosecutors say the two stole $170 million from Tyco by taking and hiding unauthorized pay and bonuses, raiding company loan programs, and forgiving loans to themselves. They say the defendants made another $430 million on their Tyco stock by lying about the company's financial condition from 1995 into 2002.
If convicted, Swartz may have to wait to visit his Enniscorthy