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Tyco International

From Alfawiki
Tyco International
Company typePublic
IndustrySecurity systems, fire protection
PredecessorTyco, Inc.
Founded1960; 66 years ago (1960)
FounderArthur J. Rosenberg
DefunctSeptember 9, 2016 (2016-09-09)
FateMerged with Johnson Controls to form Johnson Controls International plc
SuccessorJohnson Controls International plc
Headquarters
Princeton, New Jersey
,
United States
Area served
Worldwide
Key people
Edward D. Breen (last CEO)
ProductsFire protection and security solutions

Tyco International was a corporation specializing in security systems, legally registered in the Republic of Ireland with its main operational base located in Princeton, New Jersey, United States (under the name Tyco International (US) Inc.). The company’s operations were divided into two principal divisions: fire protection and security solutions.

On January 25, 2016, Johnson Controls revealed plans to merge with Tyco, uniting their operations under the entity Tyco International plc, which was subsequently renamed Johnson Controls International plc. This merger was completed on September 9, 2016.

1960s

Tyco, Inc. was established in 1960 by Arthur J. Rosenberg as an investment and holding entity comprising two units: Tyco Semiconductors and The Materials Research Laboratory. Initially concentrating on government contracts and military research, the company incorporated in Massachusetts in 1962 and shifted its focus toward advanced materials science and energy-saving technologies. After going public in 1964, Tyco embarked on a series of acquisitions starting with Mule Battery Products and accumulating an additional sixteen companies within four years.

1970s

During the 1970s, Tyco underwent significant expansion, reaching consolidated sales of $34 million and stockholder equity of $15 million early in the decade. The company was listed on the New York Stock Exchange (NYSE) in 1974. By the end of the decade, sales had exceeded $500 million, fueled by targeted acquisitions such as Simplex Technology, Grinnell Fire Protection Systems, Armin Plastics, and Ludlow Corporation.

1980s

Following a wave of acquisitions in the previous decade, Tyco restructured its subsidiaries into three core segments: Fire Protection, Electronics, and Packaging to strengthen its market positions. Later in the 1980s, it resumed growth through acquisitions including Grinnell Corporation, Allied Tube and Conduit, and Mueller Company. Eventually, Tyco reorganized into four divisions: Electrical and Electronic Components, Healthcare and Specialty Products, Fire and Security Services, and Flow Control—a configuration that persisted until 2007 when CEO Ed Breen separated the Electrical and Healthcare units into standalone public companies.

1990s

With Dennis Kozlowski as CEO from 1992 onward, Tyco aggressively expanded through acquisitions, reportedly purchasing over 3,000 companies between 1991 and 2001. Notable acquisitions included Wormald International Limited, Kendall International Co., Thorn Security, AMP Inc., Raychem, Glynwed, and United States Surgical. Reflecting its international growth, Tyco rebranded as Tyco International Ltd. in 1993.

In 1996, Tyco became part of the Standard & Poor's S&P 500 Index. The following year it acquired AT&T's Submarine Systems division to create Tyco Telecommunications—aiming to become a vertically integrated global optical network provider. Also in 1997, through a reverse takeover with ADT Limited—controlled by Michael Ashcroft—Tyco moved its incorporation to Bermuda for tax benefits. This transaction resulted in ADT Security Systems becoming a major subsidiary.

In 1999, Tyco purchased two S&P 500 firms: AMP Inc., an electronics connector manufacturer for $12.22 billion, and Raychem Corp., a materials science company for $1.4 billion—strategic acquisitions that broadened its product range and market footprint.

2000–2001

Tyco maintained its assertive acquisition approach, securing companies such as General Surgical Innovations, Siemens Electromechanical Components, AFC Cable, and Praegitzer. These strategic purchases propelled Tyco's revenue beyond $28 billion in fiscal year 2000, with nearly $2 billion generated from subsidiary equity sales.

During fiscal 2000, Tyco acquired Mallinckrodt Inc., a division of United States Surgical Corporation, along with Simplex Time Recorder Company. In 2002, Simplex was merged with Grinnell Fire Protection to establish SimplexGrinnell LP, recognized as the largest fire protection firm globally. By September 2000, the company’s book value had exceeded $141 billion; however, its long-term liabilities surged by more than $80 billion.

In the final quarter of 2001, Tyco broadened its Engineered Products and Services division through acquisitions of Century Tube Corp and Water & Power Technologies. Additionally, in December 2001, Tyco Electronics purchased Transpower Technologies, while the Plastics and Adhesives segment acquired LINQ Industrial Fabrics, Inc.

Early 2002

In January 2002, Tyco announced plans to split into four separate entities but reversed this decision following a credit rating downgrade and a decline in stock value. Nonetheless, acquisitions persisted across various sectors: Electronics added Communications Instruments; Healthcare acquired Paragon Trade Brands; Engineered Products incorporated Clean Air Systems; and Fire and Security expanded by purchasing SBC/Smith Alarm Systems, DSC Group, and Sensormatic Electronics.

Despite ongoing acquisitions, Tyco encountered substantial financial setbacks in 2002. The electronics division incurred a $2 billion charge due to excess fiber-optic cable capacity affecting the Tyco Global Network (TGN), which reported a fiscal 2002 loss exceeding $3 billion alongside a $500 million restructuring expense. Additional restructuring costs surpassed $1 billion driven by inventory write-downs and plant closures. Two goodwill impairments totaling over $750 million were linked to fiber-cable difficulties and sales challenges within Power Systems and Electrical Contracting Services. Investment losses included more than $250 million related to FLAG Telecom Holdings Ltd.

To mitigate these losses, Tyco divested Tyco Capital through an initial public offering of CIT Group shares on July 8, 2002, resulting in a $6 billion loss and an impairment charge close to $7 billion. The Healthcare division also sold Surgical Dynamics during that month.

For fiscal year 2002, revenue approached $35 billion despite a net loss exceeding $9 billion—primarily due to asset impairments at TGN, restructuring expenses, and goodwill write-offs—leading to a significant drop in share price.

By mid-2002, Tyco was engulfed in controversy involving former chairman and CEO L. Dennis Kozlowski and senior executives accused of financial improprieties. Following Kozlowski’s resignation, John F. Fort assumed the role of interim CEO amid allegations of securities violations related to nondisclosure and earnings manipulation. On June 17, 2002, Tyco initiated legal action against former executives Mark H. Swartz and Frank E. Walsh.

Late 2002

In July 2002, Edward D. Breen was named president, CEO, and chairman of Tyco for an initial term of three years. Prior to this appointment, Breen had served as president and COO of Motorola since January 2002.

Breen promptly overhauled Tyco’s leadership team by replacing the board members and executives linked to former CEO Kozlowski. In August 2002, John Krol was appointed lead director to strengthen corporate governance practices.

Breen further designated David FitzPatrick as Executive Vice President and CFO; William Lytton as Executive Vice President and General Counsel; and Eric Pillmore as Senior Vice President of Corporate Governance.

Under this new management team, Tyco initiated a two-stage internal inquiry into Kozlowski’s conduct. This investigation led to federal lawsuits filed in September and December 2002 against Kozlowski and former CFO Mark H. Swartz. When Swartz declined arbitration proceedings, Tyco pursued federal litigation against him.

Concurrently, the SEC charged Kozlowski, Swartz, and chief legal officer Mark A. Belnick with civil fraud allegations. In November 2002, New Jersey filed a federal lawsuit against Tyco and former executives under the state’s RICO statute connected to the scandal.

Tyco along with multiple former officers faced over twenty securities class-action lawsuits consolidated in the U.S. District Court for the District of New Hampshire under the case In Re Tyco International Securities Litigation. In October 2004, Tyco’s motion to dismiss these claims was partially granted.

2003

On February 3, 2003, Tyco and its employees were named in an amended consolidated federal class-action lawsuit filed by retirees concerning the company's Retirement Savings and Investment Plans under the Employee Retirement Income Security Act. Subsequently, on December 2, 2004, a New Hampshire court granted partial dismissal of Tyco's motion.

During 2003, Tyco undertook internal restructuring by establishing the Plastics & Adhesives segment, which was separated from Healthcare & Specialty Products. Enhancements in corporate governance included the reappointment of John Krol as lead director, restructuring of board committees, adoption of updated governance principles, and the introduction of a Delegation of Authority policy aimed at improving cash management controls.

Additionally, Tyco implemented an employee Guide to Ethical Conduct, mandating all personnel to complete an ethics training program and annually sign an ethics compliance statement, thereby reinforcing the company’s commitment to ethical business practices.

2004

In June 2004, Tyco initiated the worldwide print campaign titled "Tyco a vital part of your world" to elevate consumer recognition and repair its corporate reputation. Simultaneously, the company embarked on a divestiture strategy focused on realigning its core businesses. This included disposing of TGN following a full write-off, with the transaction completed in November.

As part of this approach, ADT Security sold Sonitrol in the second quarter of 2004. By the fiscal year’s close, Tyco had divested 21 businesses and liquidated four non-core units primarily within Fire and Security. Due to declining sales, Electrical Contracting Services was sold in September, followed by seven additional non-core divestitures after September 30. These efforts generated roughly $500 million in proceeds.

By the end of 2004, Tyco's global workforce numbered fewer than 260,000 employees—about two-thirds located outside the United States—and annual revenue surpassed $40 billion for the first time. Currency fluctuations contributed approximately $1.5 billion to revenue growth. Despite nearly $1 billion in charges and debt repayments during the year, net income tripled to almost $3 billion, demonstrating strong financial results and successful strategic execution.

2005

Tyco Global Network (TGN) was acquired by India's telecommunications provider Videsh Sanchar Nigam Limited (VSNL) for $130 million. VSNL is predominantly owned by Tata Group, one of India's largest conglomerates. Notably, Tyco had been valued at $3 billion during the telecom market peak.

Continuing its focus on core operations in 2005, Tyco sold off several non-core assets including its Plastics, Adhesives, and Ludlow Coated Products businesses to an affiliate of Apollo Management, L.P., a private equity firm.

In 2004, Tyco Electronics’ division M/A-COM Technology Solutions secured a landmark $2 billion contract over 20 years to maintain New York State’s Wireless Network (SWN), representing a major public safety communications initiative in the United States.

Tyco also expanded its Healthcare segment through acquisitions of Vivant Medical Inc. and Floréane Medical Implants, enhancing its medical device offerings.

2006–2007

On February 16, 2006, institutional investors involved in litigation against Tyco initiated legal action to block the company's proposed breakup plan, highlighting shareholder apprehensions regarding the corporate restructuring strategy.

By the close of fiscal year 2006, Tyco's revenues exceeded $17 billion. Despite demonstrating robust financial results and achieving debt reduction, the board sanctioned a strategy to divide Tyco into three separate publicly traded entities aimed at sharpening market focus and increasing shareholder value.

The reorganization finalized in July 2007 produced the following independent companies:

Following the separation, chairman and CEO Ed Breen assumed leadership of Tyco International, which encompassed five primary divisions: ADT Worldwide, Fire Protection Services, Safety Products, Flow Control, and Electrical and Metal Products. For 2007, the company reported revenues of $18.8 billion and maintained a workforce of 118,000 employees operating in over 60 countries and all 50 U.S. states.

2010

Tyco initiated legal proceedings against former CEO Dennis Kozlowski to reclaim $500 million in compensation and benefits he received during his period of disloyalty from 1997 to 2002, invoking New York’s "faithless servant" doctrine. In 2010, Judge Thomas Griesa ordered Kozlowski to forfeit all earnings from that timeframe.

2011–2012

In January 2011, Tyco International purchased Brink's Home Security Holdings (operating as Broadview Security) for $2 billion, integrating it into its ADT Security Services division.

That same year, Tyco acquired Visonic, a developer of home security alarm systems established by Moshe and Yaacov Kotlicki in 1973, for $100 million. Visonic had previously been publicly traded on both the London Stock Exchange and Tel Aviv Stock Exchange.

In September 2011, CEO Ed Breen announced plans for Tyco to split into three distinct publicly traded companies to maximize shareholder value. This separation was completed on October 1, 2012, resulting in:

  • Tyco: concentrating on fire protection and electronic security products and services globally.
  • The ADT Corporation: specializing in residential and small business security across North America.
  • Flow Control: focusing on water and fluid management solutions; merged with Pentair Inc. in 2012 before being acquired by Emerson Electric in 2017.

Tyco retained international rights to the ADT brand while ADT’s commercial security operations in North America were rebranded as Tyco Integrated Security. At this point, Tyco employed over 70,000 individuals across nearly 50 countries and served more than three million customers worldwide.

In September 2012, Tyco agreed to pay approximately $13 million in civil fines to the U.S. Securities and Exchange Commission for violations related to the Foreign Corrupt Practices Act (FCPA).

2013

In November 2013, Tyco initiated efforts to divest its Korean security subsidiary, Caps Co., engaging with several private equity firms during the process.

2014

In February 2014, the Carlyle Group, a US-based private equity firm, entered into exclusive negotiations to purchase Tyco’s South Korean security systems division, which was valued at around $2 billion. Additionally, that year Tyco divested its New Zealand security business, Armourguard Security Limited, selling it to Evergreen International for an undisclosed amount.

2016

On January 25, 2016, Johnson Controls announced it would merge with Tyco, consolidating all operations under the newly named Johnson Controls International plc, formerly Tyco International plc. This merger was finalized on September 9, 2016.

Corporate scandal of 2002

Dennis Kozlowski, former chairman and CEO, along with CFO Mark H. Swartz, faced allegations of embezzling over $150 million from Tyco. During their 2004 trial, both defendants asserted that their actions were authorized by the board as compensation. The trial ended in a mistrial due to issues with the jury.

Following a retrial in June 2005, Kozlowski and Swartz were found guilty on most counts and received prison sentences ranging from eight to 25 years. In May 2007, Tyco settled a $2.92 billion class action lawsuit with shareholders who had been defrauded; this settlement was complemented by a $225 million payment from the auditing firm PricewaterhouseCoopers.

Kozlowski was released on parole in January 2014.

Net revenues by year

Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Revenue (in US$ Billion) $17.3 $17.0 $17.2 $20.2 $18.5* $41.0 $39.3 $38.0 $36.8 $35.6 $34.0 $28.9 $22.5 $19.1 $6.6
  • Indicates the year Tyco split into three independently traded companies.

Products

Tyco’s range of products encompassed:

  • CCTV and Access Control solutions (brands include Tyco Integrated Security, American Dynamics, Kantech, Software House, CEM Systems)
  • Devices for circuit protection
  • Electronic article surveillance (EAS) and RFID technologies (Sensormatic)
  • Engineering service offerings
  • Fire alarm systems (Simplex, Tyco Integrated Security)
  • Fire sprinkler installations (SimplexGrinnell, Wormald)
  • Fire-fighting equipment (Scott Safety) and foam concentrates (Ansul, Chemguard, Skum, Total Walther, Sabo)
  • GRINNELL Grooved Products line
  • Safety equipment including industrial and personal protective gear (SCOTT Safety)
  • Security system solutions (Tyco Integrated Security, ADT Security Services, DSC)
  • Physical Security Information Management platforms (Proximex)
  • Valves and control systems such as pressure-relief valves used in nuclear power plants

Environmental record

Tyco incurred regulatory penalties due to environmental violations. Under the Clean Air Act, the company was fined more than $1.1 million for breaches at its former metal finishing plant in Hamburg, New Jersey, which operated between 1963 and 2000 using hazardous substances like trichloroethylene.

In relation to the Clean Water Act, a health and safety manager was convicted for deliberately bypassing wastewater treatment processes at a Tyco manufacturing facility to speed up production, causing toxic metal discharges exceeding legal limits.

In 2004, Tyco Printed Circuit Group (TPCG) in Stamford, Connecticut admitted guilt to several Clean Water Act violations and paid $10 million in fines distributed among federal and state authorities as well as local municipalities for sewer and water infrastructure improvements. Illegal activities included diluting pollutant samples and falsifying discharge reports from facilities located in Stafford and Manchester.

Daniel R. Callahan, who served as Director of Environmental Health and Safety at TPCG’s Stafford Division, pled guilty in 2003 to falsifying environmental documentation.

In 2002, Tyco was ranked 41st on the Political Economy Research Institute’s Toxic 100 list.

After acquiring Ansul, Tyco assumed liability for arsenic salt contamination affecting environments near Ansul’s operational sites.

Restatement

On June 26, 2000, the corporation revised certain data in its 1999 annual report to shareholders. Later, on October 18, 2001, it implemented the revenue recognition guidelines outlined in SAB 101, which resulted in adjustments to the financial results for the first three quarters of fiscal year 2001. On October 24, 2002, reported earnings were amended following internal audit findings related to dealer fees within its ADT home security division. Subsequently, on June 16, 2003, the company restated multiple years of financial statements after a review conducted by securities regulators.

References

  • A Hill and A Michaels, "Paw taste condemns Kozlowski: Report says Tyco bought $15,000 dog umbrella stand for chief's apartment" (18 September 2002) Financial Times

External links

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