10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2004
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

001-13836
(Commission File Number)

TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)

Bermuda (Jurisdiction of Incorporation)	98-0390500 (IRS Employer Identification No.)
Second Floor, 90 Pitts Bay Road, Pembroke HM 08, Bermuda (Address of registrant's principal executive office)
441-292-8674 (Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Shares, Par Value $0.20 Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o.

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III or this Form 10-K or any amendment to this Form 10-K o.

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes ý    No o.

        The aggregate market value of voting common shares held by nonaffiliates of registrant was approximately $57,158,586,150 as of March 31, 2004.

        The number of common shares outstanding as of December 1, 2004 was 2,011,601,615.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the registrant's proxy statement filed within 120 days of the close of the registrant's fiscal year in connection with the registrant's 2005 annual general meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

        See pages 76 to 79 for the exhibit index.

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	1
Item 2.	Properties	12
Item 3.	Legal Proceedings	13
Item 4.	Submission of Matters to a Vote of Security Holders	24
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6.	Selected Financial Data	26
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	70
Item 8.	Financial Statements and Supplementary Data	72
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	72
Item 9A.	Controls and Procedures	72
Item 9B.	Other Information	74
Part III
Item 10.	Directors and Executive Officers of the Registrant	75
Item 11.	Executive Compensation	75
Item 12.	Security Ownership of Certain Beneficial Owners and Management	75
Item 13.	Certain Relationships and Related Transactions	75
Item 14.	Principal Accountant Fees and Services	75
Part IV
Item 15.	Exhibits and Financial Statement Schedules	76
Signatures		80
Index to Consolidated Financial Statements		81

PART I

Item 1.    Business

General

        Tyco International Ltd. ("we," "Tyco" or the "Company") is a diversified manufacturing and service company that, through its subsidiaries:

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designs, manufactures, installs, monitors and services electronic security and fire protection systems;



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designs, manufactures and distributes electrical and electronic components;



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designs, manufactures and distributes medical devices and supplies, imaging agents, pharmaceuticals and adult incontinence and infant care products;



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designs, manufactures, distributes and services engineered products, including industrial valves and controls as well as steel tubular goods, and provides environmental and other industrial consulting services; and



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designs, manufactures and distributes plastic products, adhesives and films.

        Unless otherwise indicated, references in this Annual Report to 2004, 2003 and 2002 are to Tyco's fiscal year ended September 30, 2004, 2003 and 2002, respectively.

Strategy

        Tyco's operating strategy is to be a high-quality, low-cost producer and provider in each of the markets we serve. We promote our leadership positions by investing in existing businesses and developing new markets. Our current business strategy focuses on enhancing internal growth and operational efficiency for existing Tyco businesses, and we plan to achieve this goal primarily through new product innovation, increased market share, increasing the service and repair components of our existing businesses and continued geographic expansion. We have implemented and will continue to implement additional Six Sigma initiatives across our business segments to achieve best-in-class operating practices. We strive to increase the value of our Company and our global portfolio of diversified brands by exceeding customers' expectations and by achieving market leadership and operating excellence in every segment. Leveraging the strengths of our existing operations, we seek to enhance value for our shareholders through operational excellence and maximization of cash flows. Additionally, we have strengthened our balance sheet by using our strong cash flow to reduce debt. We are also continuing to pursue the disposition of certain non-core businesses and may consider an appropriate acquisition should the opportunity arise. We are committed to being a leader in corporate governance so that we can continue to earn the respect and confidence of our shareholders, employees, suppliers and customers as well as the financial community.

Operating Segments

        See Note 23 to the Consolidated Financial Statements for certain segment and geographic financial data relating to our business.

I.    Fire and Security

        Tyco is the world's leading provider of both electronic security services and fire protection services. With 2004 net revenue of $11.5 billion, our Fire and Security businesses currently comprise 29% of our consolidated net revenue. In 2003 and 2002, net revenue totaled $10.9 billion or 30% of our consolidated net revenue and $10.2 billion or 29% of our consolidated net revenue, respectively. The group's products and services include:

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designing, manufacturing, installing, monitoring and servicing electronic security systems;

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designing, manufacturing, installing and servicing a broad line of fire detection systems and suppression systems, and manufacturing and servicing fire extinguishers and related products; and



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providing integrated systems for surveillance and control of public transportation systems, bridges, tunnels and other public works.

        Tyco Fire and Security consists of two reporting units: Electronic Security Services and Fire Protection Contracting and Services.

Electronic Security Services

        We are the world's leading provider of electronic security products and services and event monitoring, which includes the monitoring of burglar alarms, fire alarms, medical alert systems, such as our Personal Emergency Response Systems, and other activities where around-the-clock monitoring and response are required. We offer regular inspection and maintenance services to ensure that systems will function properly and can be upgraded as technology or risk profiles change. We are also a leading supplier of electronic security solutions to the retail, commercial and industrial marketplaces, offering anti-theft, video surveillance, access control, electronic asset protection and security management systems, products and services. These and other security services are provided principally through our ADT operating companies.

        Electronically monitored security systems are tailored to our customers' specific needs and involve the installation and use on a customer's premises of devices designed for intrusion detection and access control, as well as reaction to various occurrences or conditions, such as movement, fire, smoke, flooding, environmental conditions, industrial processes and other hazards. These detection devices are connected to microprocessor-based control panels, which communicate to a monitoring center (located remotely from the customer's premises) where alarm and supervisory signals are received and recorded. In most systems, control panels can identify the nature of the alarm and the areas within a building where the sensor was activated. Depending upon the type of service for which the subscriber has contracted, monitoring center personnel respond to alarms by relaying appropriate information to the local fire or police departments, notifying the customer or taking other appropriate action, such as dispatching employees to the customer's premises. In some instances, the customer may monitor the system at its own premises or the system may be connected to local fire or police departments.

        Whether systems are monitored by the customer at its premises or connected to one of our monitoring centers, we usually provide support and maintenance through service contracts. Systems installed at customers' premises may be owned by us or by our customers.

        We market our electronic security services to commercial and residential customers through both a direct sales force and an authorized dealer network. A separate national accounts sales force services large commercial customers. We also utilize advertising and direct mail to market our services.

        We provide residential electronic security services primarily in North America, Europe and South Africa, with a growing presence in the Asia-Pacific region. Our commercial customers include financial institutions, industrial and commercial businesses, federal, state and local governments, defense installations, and health care and educational facilities. Our customers are often prompted to purchase security systems by their insurance carriers, which may offer lower insurance premium rates if a security system is installed or require that a system be installed as a condition to coverage. It has been our experience that the majority of commercial and residential monitoring contracts are renewed after their initial terms. In general, relocations account for the largest number of residential discontinuances while business closures comprise the largest single factor impacting commercial contract attrition.

        We are the leader in anti-theft systems. The majority of the world's leading retailers use our systems to protect against shoplifting and employee theft. We manufacture these SENSORMATIC electronic article surveillance systems and generally sell them through our direct sales force in North and South America, Europe, Australia, Asia and South Africa. A growing trend in the loss protection

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industry is for security labels to be applied to goods at the point of manufacture. In most cases, we sell these labels directly to the manufacturers or their packaging agents. We also develop and distribute access control and video surveillance systems, which are sold through direct and distributor channels.

        We manufacture certain alarm, detection and activation devices and central monitoring station equipment both for installation by us and for sale to other installers, although we outsource some of the electronic components we install.

        The security business in North America is highly competitive, with a number of major firms and some 12,000 smaller regional and local companies. Similarly, Tyco competes with several national companies and several thousand regional and local companies in Europe, the Asia-Pacific region, Latin America and South Africa. Competition is based primarily on price in relation to quality of service. We believe that the quality of our electronic security service is higher than that of many of our competitors and, therefore, our prices may be higher than those charged by our competitors.

Fire Protection Contracting and Services

        We design, fabricate, install and service automatic fire sprinkler systems, fire alarm and detection systems and special hazard suppression systems in buildings, industrial plants and off-shore installations, as well as respiratory systems and other life-saving devices. Tyco's fire protection businesses utilize a worldwide network of sales offices, operating globally under various trade names including SIMPLEXGRINNELL, WORMALD, MATHER & PLATT, TOTAL WALTHER, DONG BANG, ZETTLER, ANSUL, SCOTT and TYCO.

        We install fire protection systems in both new and existing buildings. Our fire protection systems are purchased by owners, construction engineers and mechanical or general contractors. In recent years, the retrofitting of existing buildings has grown as a result of legislation mandating the installation of fire protection systems, especially in hotels, healthcare facilities, educational establishments and other buildings accessible to the general public. We continue to focus on system maintenance and inspection, which have become more significant parts of our business.

        The majority of the fire suppression systems installed by Tyco are water-based. However, we are also the world's leading provider of custom designed special hazard fire protection systems which incorporate specialized extinguishing agents such as foams, dry chemicals and gases, in addition to spill control products designed to absorb, neutralize and solidify spills of hazardous materials. These systems are often especially suited to fire protection in certain manufacturing, power generation, petrochemical, offshore oil exploration, transportation, data processing, telecommunications, commercial food preparation, mining and marine applications.

        We manufacture and distribute SCOTT and SABRE breathing systems for use by firefighters and other first responders and for industrial applications. Military forces from 25 countries use our breathing apparatus and more than half a million U.S. firefighters rely on our SCOTT AIR-PAKR brand of self-contained breathing apparatus. SCOTT and SABRE products are sold globally through a network of distributors. SCOTT is considered the world leader in respiratory protection innovation for first responders.

        In Asia, and to a lesser extent in Europe, Tyco designs, installs and maintains integrated systems which monitor and manage urban traffic control systems, as well as lighting, ventilation, fire detection, surveillance and traffic control for bridges, tunnels, railways and mines.

        The majority of the mechanical components (and, in North America, a high proportion of the pipe) used in our fire protection systems are manufactured by Tyco Engineered Products and Services. We use computer-aided-design technology that reduces the time required to design systems for specific applications and coordinates the fabrication and delivery of system components. We also have fabrication plants that cut, thread and weld pipe, which is then shipped with other prefabricated components to job sites for installation.

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        Competition in the fire protection contracting business varies by region. In North America, Tyco competes with hundreds of smaller contractors on a regional or local basis for the installation of fire protection, alarm and detection systems. In Europe, Tyco competes with many regional or local contractors on a country-by-country basis. In Australia, New Zealand and Asia, we compete with a few large fire protection contractors, as well as with many smaller regional or local companies. Tyco competes for fire protection systems contracts primarily on the basis of price, service and quality.

II.    Electronics

        Tyco is the world's leading supplier of passive electronic components. With 2004 net revenue of $11.8 billion, our Electronics businesses currently comprise 29% of our consolidated net revenue. In 2003 and 2002, net revenue totaled $10.5 billion or 29% of our consolidated net revenue and $10.6 billion or 31% of our consolidated net revenue, respectively. The group's products and services include:

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designing, engineering and manufacturing electronic/electrical connector systems, fiber optic components, wireless devices including private radio systems, heat shrink products, circuit protection devices, magnetic devices, wire and cable, relays, sensors, touch screens, smart card components, identification and labeling products, power systems and components, printed circuit boards and assemblies, electronic modules, application tooling, switches and battery assemblies.

        Tyco Electronics consists of six reporting units: Electronic Components, Wireless, Electrical Contracting Services, Power Systems, Printed Circuit Group and Submarine Telecommunications (formerly TyCom).

        With the exception of Submarine Telecommunications, these businesses design, manufacture and market a broad range of electronic, electrical and electro-optic passive and active devices and a number of interconnection systems and connector-intensive assemblies, as well as wireless products including radar sensors, global positioning satellite systems components, private radio systems, silicon and gallium arsenide semiconductors and microwave sub-systems. These products have potential uses wherever an electronic, electrical, computer or telecommunications system is involved. Tyco Electronics manufactures and sells more than 500,000 parts in over 750 global product lines, including power systems, terminals, fiber optic components, printed circuit boards, cable connectors and assemblies, cable and cabling systems, and related application tools and application tooling equipment. Products are sold under the AMP, AGASTAT, AXICOM, AUGAT, BUCHANAN, CRITCHLEY, DULMISON, ELO-TOUCH SYSTEMS, M/A-COM, POTTER & BRUMFIELD, RAYCHEM, SCHRACK and TYCO ELECTRONICS trade names, among others.

        Sales and marketing are done via direct sales and distributors to customers including original equipment manufacturers and their subcontractors, utilities, government agencies, value-added resellers and those who install, maintain and repair equipment. In 2004, the group's direct sales represented 86% of net revenue while the remaining net revenue was via distributors. Their customers are found in the automotive, communications equipment manufacturing, telecommunications service, computer, aerospace, military, household appliance, industrial machinery and equipment, instrumentation, consumer electronics, energy and networking industries. In total, these businesses serve over 250,000 customers located in over 55 countries and maintain a strong local presence in the geographic areas in which they operate, including the Americas, Europe and the Asia-Pacific region.

        Tyco Submarine Telecommunications is a leading provider of undersea fiber optic networks and services. Tyco Submarine Telecommunications' products and services include: designing, manufacturing and installing undersea cable communications systems and servicing and maintaining major undersea cable networks.

        Tyco Electronics operates in highly competitive markets. The competition experienced across product lines from other companies ranges in size from large, diversified manufacturers to small, highly

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specialized manufacturers. Competition is on the basis of breadth of product offering, product innovation, price, quality and service.

III.  Healthcare

        Tyco is a global leader in the medical products industry. With 2004 net revenue of $9.1 billion, our Healthcare businesses currently comprise 23% of our consolidated net revenue. In 2003 and 2002, net revenue totaled $8.4 billion or 23% of our total consolidated net revenue and $7.8 billion or 22% of our consolidated net revenue, respectively. The group's products include:

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a wide variety of medical devices and supplies, including laparoscopic instruments, sutures and surgical staplers, electro-surgical instruments, pulse oximeters, ventilators, needles and syringes, wound care products, incontinent care products, and products for vascular therapy;



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home use portable liquid oxygen systems, sleep disorder diagnostic and sleep therapy systems;



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imaging reagents, delivery systems, and nuclear diagnostic agents;



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bulk and unit dose pharmaceuticals; and



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retail brand adult incontinence care, infant care and feminine hygiene products.

        Tyco Healthcare consists of three reporting units: Medical Devices & Supplies, Pharmaceuticals and Retail.

Medical Devices & Supplies

        Medical Devices & Supplies consists of five primary divisions: Medical, Surgical, Respiratory, Imaging and International.

Medical

        The Medical Division manufactures and markets a broad range of wound care products; needles and syringes; sharps disposables; vascular therapy products; electrodes; operating room kits and trays; urological care products; enteral feeding products; incontinence care products; and nursing care products. These products are marketed via a combination of direct sales representatives and third-party distributors to hospitals, surgi-centers, alternate care facilities and homes worldwide.

        The Medical Division consists of many market-leading brands such as KERLIX and CURITY wound care dressings, WINGS adult incontinence products, SCD compression devices, T.E.D. anti-embolism stockings, MONOJECT MAGELLAN safety needles and syringes, KANGAROO enteral feedings systems, DEVON O.R. surgical kits, and MEDI-TRACE diagnostic and monitoring electrodes.

Surgical

        The Surgical Division develops, manufactures and markets a broad spectrum of widely recognized surgical products that are used around the world in operating rooms, emergency rooms, surgi-centers and physician offices.

        U.S. Surgical is a market leader in innovative wound closure products and advanced surgical devices. Its Auto Suture business offers a complete line of surgical devices and laparoscopic instruments for general and specialty procedures. The SYNETURE business is the evolution of U.S. Surgical/Davis & Geck from a product-driven suture organization to one focused on clinical solutions for wound closure with advanced suture and biosurgery therapies. Valleylab is a leading manufacturer and marketer of a wide array of electro-surgical, ultrasonic and radiation ablation devices. Among its leading brand names are VALLEY LAB, the FORCE FX electro-surgical generator, the LIGASURE vessel occlusion system and the COOL-TIP RF (radio frequency) system.

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Respiratory

        The Respiratory Division develops, manufactures and markets an extensive line of products and services that monitor oxygen saturation levels in the blood (pulse oximetry), help facilitate and monitor anesthesia, diagnose and treat respiratory disease, and provide life support for critically ill patients. These products are sold around the world under the NELLCOR and PURITAN BENNETT brands and are used in the hospital and the home.

        Nellcor continues to drive advancements in pulse oximetry technology with the introduction of the OXIMAX pulse oximetry system. For critically ill patients or for those undergoing surgery, the MALLINCKRODT endotracheal, and SHILEY tracheotomy tubes are industry leaders. Puritan Bennett is known around the world for its critical care ventilators, and the HELIOS portable liquid oxygen system for respiratory impaired patients.

Imaging

        The Imaging Division is devoted to improving the diagnostic sciences of X-ray, magnetic resonance imaging (MRI) and nuclear medicine. By developing, manufacturing, and marketing contrast agents, radiopharmaceuticals and delivery systems, Mallinckrodt Imaging helps enhance the utility and quality of images obtained via these procedures. Mallinckrodt's Imaging Division partners with radiologists, cardiologists and nuclear medicine physicians to improve the quality of diagnosis in multiple disease states through well known branded diagnostic pharmaceuticals, including OPTIRAY X-ray contrast media, OPTIMARK MRI contrast media, and thallium and TECHNESCAN MAG3 radiopharmaceutical. The MALLINCKRODT family of imaging products is sold into hospitals, radiopharmacies and alternate site imaging centers throughout the world.

International

        The International Division is responsible for the marketing, distribution and export of all Tyco Healthcare Group products (excluding Pharmaceuticals and Retail products) outside of the United States. The International Division markets directly to hospitals and medical professionals, as well as through independent distributors with a worldwide presence. Although the mix of product lines offered varies from country to country, its operations are organized primarily into four geographic regions: Europe/Middle East/Africa, Japan, the Asia-Pacific region and Latin America.

Pharmaceuticals

        The Mallinckrodt Pharmaceutical Division is comprised of three businesses—Bulk Pharmaceuticals (active pharmaceutical ingredients), Dosage Pharmaceuticals and Specialty Chemicals. The Bulk Pharmaceuticals business is the largest producer of both medicinal narcotics and acetaminophen worldwide. Ninety-five percent of these products are used within the pharmaceutical industry to manufacture dosage form drugs. The Dosage Pharmaceuticals business has four distinct divisions: generic narcotic pharmaceuticals, branded central nervous systems products, addiction treatment products and contract pharmaceutical manufacturing for third parties. These products are sold to major wholesalers and drug store chains primarily in the United States. The Specialty Chemicals business includes a wide array of specialty chemicals targeted at: research and development and analytical laboratories; process materials used to manufacture biopharmaceuticals; and specialty chemicals used to manufacture semiconductor chips, many of which are sold under the J.T. BAKER name in the United States.

Retail

        The Retail Division is the industry leader for retail brand adult incontinent care, infant care and feminine hygiene products within continental North America. This division develops, manufactures and markets a wide variety of retail brand products for the North American retail markets supplying a broad majority of retail mass merchandisers, food stores and drug stores. Through our "first-to-market"

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approach, the Retail Division helps retailers such as Wal-Mart, Target, Kroger, Albertson's, CVS, Loblaw, Dollar General and Family Dollar manage their categories and build their own store brand presence with the high-quality products consumers demand.

        Tyco Healthcare's competitors include Johnson & Johnson, Becton Dickinson and C.R. Bard, among others, and competition is based on breadth of product offerings, quality of product, service and price.

IV.    Engineered Products and Services

        Tyco is the world's leading manufacturer of industrial valves and controls. With 2004 net revenue of $6.0 billion, our Engineered Products and Services businesses currently comprise 15% of our consolidated net revenue. Net revenue in 2004 includes $739 million representing a change in how we classify certain sub-contract and other costs that are paid by Tyco Infrastructure Services and re-billed to their customers. These costs were historically treated as "pass through" and were therefore not included in reported revenue and cost of revenue of Tyco Infrastructure Services. Also see Note 1 to the Consolidated Financial Statements. In both 2003 and 2002, net revenue totaled $4.5 billion or 13% of our consolidated net revenue. The group's products and services include:

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manufacturing and servicing industrial, commercial, water and wastewater valves and related devices, as well as providing other engineered products solutions;



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manufacturing steel pipe and tubular goods, security fence products and electrical raceway products, including steel conduit, pre-wired armored cable, flexible conduit, steel support systems and fasteners, cable tray and cable ladder;



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providing a broad range of consulting, engineering and construction management and operating services for water, wastewater, environmental, transportation and infrastructure markets; and



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manufacturing and distributing fire sprinkler devices, valves, steel and plastic pipe and fittings and pipe couplings used in commercial, residential and industrial fire protection systems.

        Tyco Engineered Products and Services is comprised of three reporting units: Tyco Flow Control and Fire Products, Tyco Electrical & Metal Products and Tyco Infrastructure Services.

Flow Control and Fire Products

Tyco Flow Control

        Tyco Flow Control manufactures both standard and highly specialized valves in a wide variety of configurations, body types, materials, pressure ratings and sizes. It also manufactures related equipment, instrumentation and products such as valve actuators, gauges, positioners, valve control systems and vapor control products, as well as a full line of thermal heat tracing products, specialty heaters and related products and turnkey installation services. These products are manufactured in Tyco Flow Control's facilities located in North America, Europe, South America and the Asia-Pacific region. Tyco Flow Control's products are used in various applications including power generation, chemical, petrochemical, oil and gas, water distribution, wastewater, pulp and paper, commercial irrigation, mining, industrial process, food and beverage, plumbing and HVAC. Tyco Flow Control also provides engineering, design, inspection, maintenance, repair and commissioning services.

        Tyco's valves and related products are sold under many trade names, including, among others, KEYSTONE, GRINNELL, VANESSA, CROSBY, ANDERSON GREENWOOD, TYCO THERMAL CONTROLS and TRACER. Tyco Flow Control sells valves and related products in most geographic areas directly through its internal sales force and in some geographic areas through a network of independent distributors and manufacturers' representatives. The valve industry is highly fragmented and we compete against a number of international, national and local manufacturers as well as against specialized manufacturers on the basis of price, delivery, breadth of product line and specialized product capability.

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Tyco Fire & Building Products

        Tyco Fire & Building Products manufactures and sells a wide variety of products to fire protection contractors and fabricators of fire protection systems. These products include a complete line of fire sprinkler devices, specialty valves, plastic pipe and pipe fittings and ductile iron pipe couplings. Tyco Fire & Building Products manufactures these products in the United States, United Kingdom, Germany, China and Malaysia and sells them under the TYCO, GEM, STAR, CENTRAL, GRINNELL and CENTRAL SPRAYSAFE brand names. In North America, a complete line of steel sprinkler pipe is manufactured by Tyco Electrical & Metal Products (Allied Tube & Conduit), thus enabling Tyco to offer a complete line of fire protection systems and services. Tyco Fire & Building Products also produces a complete line of specialty fastening products for the building industry that are manufactured in the United Kingdom under the trade names of LINDAPTER and ANCON and metal framing and support products that are manufactured in the United Kingdom and Germany.

        Central Sprinkler maintains a network of company-owned distribution facilities in the United States that stock and sell a full line of fire protection products directly to contractors and installers. GEM Sprinkler and Star Sprinkler sell fire protection products through a network of independent distributors. In Canada, Central America, South America and the Asia-Pacific region, we sell fire protection products through independent distribution and in some cases directly to fire protection contractors. In Europe and the Middle East, we operate a number of company-owned distribution facilities which stock and sell a full line of fire protection, mechanical, building products and other flow control products. Competition for the sale of fire products is based on price, delivery, breadth of product line and specialized product capability. The principal competitors are specialty products manufacturing companies based in the United States, with other smaller competitors in Europe and Asia.

Electrical & Metal Products

        Tyco Electrical & Metal Products manufactures steel and related products in North America and Brazil. Its products include steel electrical conduit, pre-wired armored cable, flexible electrical conduit, metal framing systems, cable tray and cable ladder and related products utilized in the construction, industrial and original equipment markets. In North America, the Allied Tube & Conduit ("Allied") business is the leading manufacturer of steel electrical conduit, and our AFC Cable Systems division is the leading manufacturer of steel and aluminum pre-wired armored cable. The Georgia Pipe business manufactures plastic conduit. Allied manufactures metal framing and support systems and electrical cable tray and cable ladders in North America and sells them under the POWERSTRUT, UNISTRUT and T.J. COPE trade names. In addition, Allied manufactures and distributes welded steel tubular products in North America. In Brazil, tube is manufactured and sold under the trade names of FREFER and DINACO. These businesses serve a wide spectrum of customers and applications ranging from automotive, fire protection, security and safety containment, recreational equipment, commercial construction and traffic control systems. Products compete on the basis of price, availability and breadth of product line.

Infrastructure Services

        Tyco Infrastructure Services provides a broad range of environmental, consulting and engineering services through its EARTH TECH business. Earth Tech's principal services consist of a full-spectrum of water, wastewater, environmental and hazardous waste management services. Earth Tech also provides infrastructure and transportation design and construction services for institutional, civic, commercial and industrial clients; design, construction management, project financing and facility operating services for water and wastewater treatment facilities for municipal and industrial clients; and transportation engineering and consulting. Earth Tech operates through a network of offices in the United States, Canada, the United Kingdom, Ireland, Mexico, Germany, Sweden, China, Australia and

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Thailand. Earth Tech competes with a number of international, national, regional and local companies on the basis of price and the breadth and quality of services.

V.    Plastics and Adhesives

        With 2004 net revenue of $1.8 billion, our Plastics and Adhesives businesses currently comprise 4% of our consolidated net revenue. In both 2003 and 2002, net revenue totaled $1.7 billion or 5% of our consolidated net revenue. The group's products include:

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polyethylene film and film products such as flexible plastic packaging, plastic bags and sheeting, coated and laminated packaging materials, tapes and adhesives; and



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plastic garment hangers, disposable dinnerware, and pipeline coatings for the oil, gas and water distribution industries.

        Tyco Plastics and Adhesives consists of four reporting units: Tyco Plastics, Tyco Adhesives, A&E Products and Ludlow Coated Products.

Plastics

        Tyco Plastics manufactures polyethylene-based film, packaging products, bags and sheeting in a wide range of sizes, gauges, strengths, stretch capacities, clarities and colors. Tyco Plastics' products include: RUFFIES, a national brand consumer trash bag sold to mass merchants, grocery chains and other retail outlets, and FILM-GARD, a leading plastic sheeting product sold to consumers and professional contractors through Do-It-Yourself outlets, home improvement centers and hardware stores. FILM-GARD products are produced in various sizes for a variety of uses, including painting, renovation, construction, landscaping and agriculture. Additionally, in the United States, Tyco Plastics is one of the largest producers of stretch film, one of the largest producers of can liners for the away-from-home market, and a leading supplier of custom packaging products used for primary food packaging and the beverage industries. Tyco Plastics' Catering division manufactures and markets disposable dinnerware products to the retail and foodservice industries. The Catering division markets their many product lines under brand names including SCROLLWARE, PRESTIGE, LEGACY and OPULENCE. Tyco Plastics sells its products directly to retailers for resale, to distributors for resale or directly to end-users. Tyco Plastics competes with other nationally recognized brands as well as many smaller regional producers on the basis of product innovation, delivery, price, breadth of product line and specialized product capabilities. Manufacturing facilities are located throughout the United States, Canada and the United Kingdom to ensure superior customer service and competitive transportation costs.

Adhesives

        The Tyco Adhesives division manufactures and markets specialty adhesive products and tapes for industrial applications, including external corrosion protection products for oil, gas and water pipelines. Tyco Adhesives also produces duct, foil, strapping, packaging and electrical tapes and spray adhesives for industrial and consumer markets worldwide, and manufactures cloth and medical tapes for Tyco Healthcare and others. Products are sold under the MANULI tapes, POLYKEN, NASHUA tape, RAYCHEM, BETHAM, NATIONAL and PATCO brand names. Tyco Adhesives competes with both small and large manufacturers on the basis of price, service, and specialized product capabilities.

A&E Products

        A&E Products is a manufacturer of plastic garment hangers worldwide, operating from over 25 global locations and selling into over 50 countries. A&E Products also operates hanger-recycling facilities in the United States and Europe. The reused hangers are purchased from various retailers and then sorted, processed and packaged for sale back to the apparel market. A&E Products competes with many manufacturers on the basis of price, service, marketing coverage and design innovation.

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Ludlow Coated Products

        Ludlow Coated Products manufactures a variety of specialty laminates and coated products principally derived from paper, film, foil and fabrics. Many Ludlow products are key components in industrial, military, food and other specialty packaging applications. Ludlow's product line also includes housewraps, material handling slip sheets and flexible intermediate bulk containers. Ludlow markets its specialty laminates and coated products through its own sales force and through independent manufacturers' representatives. Ludlow competes with many large manufacturers of laminates and coated products on the basis of price, service, marketing coverage and custom application engineering, and sells its products to manufacturers, producers and converters. It has various specialized competitors in different markets.

Backlog

        See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for information relating to our backlog.

Research and Development

        The amounts expended for Tyco-sponsored research and development during 2004, 2003 and 2002 were $784 million, $667 million and $633 million, respectively.

        Tyco-sponsored research and development expense by segment for the years ended September 30, 2004, 2003 and 2002 is as follows ($ in millions):

	2004		2003		2002
Electronics	$	427	$	379	$	389
Healthcare		209		150		127
Fire and Security		101		100		87
Engineered Products and Services		40		32		23
Plastics and Adhesives		7		6		7
	$	784	$	667	$	633

        Approximately 5,800 full-time scientists, engineers and other technical personnel were engaged in our product research and development activities as of September 30, 2004.

        Research activity at Electronics focuses specifically on new product development and a continuous expansion of technical capabilities. Healthcare focuses on technologies to complement existing product lines and applying expertise to refine and successfully commercialize such products and technologies and on acquiring rights to new products. We anticipate that Healthcare's research and development spending will continue to increase during 2005. Research activity in Fire and Security relates mostly to the design of fire and intrusion alarm products and emergency alarm systems, as well as products related to electronic article surveillance. Engineered Products and Services focuses on improvements in hydraulic design, which controls the motion of fluids, resulting in new fire protection devices and flow control products. Plastics and Adhesives' research activities consist primarily of new and improved product development.

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Raw and Other Purchased Materials

        We are a large buyer of steel and resin in the United States. We are also a large buyer of copper, brass, gold, electronic components, chemicals and additives, thin and flexible copper clad materials, zinc, paper, ink, foil, adhesives, cloth, wax, pulp and cotton. Certain of the components used in the Fire Protection business, principally certain valves and fittings, are purchased for installation in fire protection systems or for distribution. Materials are purchased from a large number of independent sources around the world. There have been no shortages in materials which have had a material adverse effect on our businesses. However, significant increases in raw material costs may have an adverse impact on costs and operating margins. We enter into long-term supply contracts, using fixed or variable pricing to manage our exposure to potential supply disruptions.

Patents and Trademarks

        We own a portfolio of patents, which principally relate to electrical and electronic products, healthcare products, fire protection devices, electronic security systems, flow control products, tubing, building and cable products, and plastic and adhesive products. We also own a portfolio of trademarks and are a licensee of various patents and trademarks. Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. Trademark rights may potentially extend for longer periods of time and are dependent upon national laws and use of the marks. All capitalized product names throughout this document are trademarks owned by, or licensed to, the Company or its subsidiaries. Although these have been of value and are expected to continue to be of value in the future, in the opinion of management the loss of any single patent or trademark would not materially affect the conduct of the business in any of our segments.

Employees

        Tyco employed 258,400 people at September 30, 2004, of which 98,000 are employed in the United States and 160,400 are outside the United States. We have collective bargaining agreements with labor unions covering 43,100 employees at certain of our North American, European and Asia-Pacific businesses. We believe that our relations with the labor unions are generally good.

        In April 1994, following lengthy contract talks with the Road Sprinkler Fitters Local Union No. 669, our Grinnell subsidiary declared that negotiations were at an impasse and implemented its last best and final offer. Employees in those locations, representing 64% of Grinnell Fire Protection's North American union employees at the time (approximately 1,200 employees), went on strike. In January 2001, the United States Court of Appeals for the Fourth Circuit determined that while Grinnell had acted in good faith, the Company should not have declared an impasse. The court ordered the reinstatement of the terms of the 1994 collective bargaining agreement, instructed the Company to compensate any employees affected by the Company's decision to declare an impasse and ordered the parties to return to their negotiations. It was also in January 2001 that Tyco acquired Simplex Time Recorder Co. In January 2002, Grinnell Fire Protection and Simplex Time Recorder Co. began doing business as SimplexGrinnell LP (an indirect wholly-owned subsidiary of Tyco). As instructed by the court, SimplexGrinnell reinstated relevant terms of the 1994 collective bargaining agreement, made whole any affected employees (approximately 2% of SimplexGrinnell's employee population) and resumed negotiations with Local Union No. 669. Despite the Company's good faith attempts to continue negotiations, the Union called another strike in September 2003. This strike is ongoing and has not had any material effect on the Company's operations.

Environmental Matters

        We are subject to numerous foreign, federal, state and local environmental protection and health and safety laws governing, among other things, the generation, storage, use and transportation of

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hazardous materials; emissions or discharges of substances into the environment; and the health and safety of our employees. The cost of compliance with environmental laws, however, has not had, and based on current information and applicable laws, is not expected to have, a material adverse effect upon our capital expenditures, earnings or competitive position.

        Certain environmental laws assess liability on current or previous owners or operators of real property for the cost of removal or remediation of hazardous substances at their properties or at properties at which they have disposed of hazardous substances. In addition to cleanup actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of or exposure to hazardous substances. We have received notification from the United States Environmental Protection Agency, and from state environmental agencies, that conditions at a number of sites where we and others disposed of hazardous substances require cleanup and other possible remedial action and may require that we reimburse the government or otherwise pay for the cost of cleanup of those sites and/or for natural resource damages. We have projects underway at a number of current and former manufacturing facilities to investigate and remediate environmental contamination resulting from past operations.

        The ultimate cost of cleanup at disposal sites and manufacturing facilities is difficult to predict given uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations and alternative cleanup methods. Based upon our experience, current information and applicable laws, we believe that it is probable that we would incur remedial costs in the range of approximately $167 million to $443 million. As of September 30, 2004, we believe that the best estimate within this range is approximately $265 million, of which $42 million is included in accrued expenses and other current liabilities and $223 million is included in other long-term liabilities on the Consolidated Balance Sheets. In view of our financial position and reserves for environmental matters of $265 million, we believe that any potential payment of such estimated amounts will not have a material adverse effect on our financial position, results of operations or cash flows.

Available Information

        Our Internet website is www.tyco.com. We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, reports filed pursuant to Section 16 and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission. In addition, we have posted the charters for our Audit Committee, Compensation and Human Resources Committee, and Nominating and Governance Committee, as well as our Board Governance Principles and Guide to Ethical Conduct, on our website under the heading "Our Commitment—Governance." These charters and principles are not incorporated in this report by reference. We will also provide a copy of these documents free of charge to shareholders upon request.

Item 2.    Properties

        Our operations are conducted in facilities throughout the world aggregating approximately 109 million square feet of floor space, of which approximately 59 million square feet are owned and approximately 50 million square feet are leased. These facilities house manufacturing, distribution and warehousing operations, as well as sales and marketing, engineering and administrative offices.

        Fire and Security operates through a network of offices located in North America, Central America, South America, Europe, the Middle East, the Asia-Pacific region and South Africa. Manufacturing facilities are located in North America, the United Kingdom, Germany, Australia, New Zealand, South Korea and Japan. The group occupies approximately 22 million square feet, of which 5 million square feet are owned and 17 million square feet are leased.

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        Electronics has manufacturing facilities in North America, Central and South America, Europe, Asia and Australia. The group occupies approximately 32 million square feet, of which 21 million square feet are owned and 11 million square feet are leased.

        Healthcare has manufacturing facilities in North America, Europe, the Middle East and Asia. The group occupies approximately 22 million square feet, of which 13 million square feet are owned and 9 million square feet are leased.

        Engineered Products and Services has manufacturing facilities, warehouses and distribution centers throughout North America, Europe, the Asia-Pacific region and Central and South America. The group occupies approximately 23 million square feet, of which 13 million square feet are owned and 10 million square feet are leased.

        Plastics and Adhesives has manufacturing facilities in North America, Europe and Asia. The group occupies approximately 10 million square feet, of which 7 million square feet are owned and 3 million square feet are leased.

        In the opinion of management, our properties and equipment are in good operating condition and are adequate for our present needs. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. See Note 18 to Consolidated Financial Statements for a description of our lease obligations.

Item 3.    Legal Proceedings

Securities Class Actions

        As previously reported in our periodic filings, Tyco and certain of our former directors and officers have been named as defendants in more than two dozen securities class actions. Most of the securities class actions have now been transferred to the United States District Court for the District of New Hampshire by the Judicial Panel on Multidistrict Litigation for coordinated or consolidated pretrial proceedings. In eight of the actions, plaintiffs have moved to have their cases remanded to state courts.

        On January 28, 2003, the court-appointed lead plaintiffs in the New Hampshire securities actions filed In Re Tyco International Securities Litigation, a Consolidated Securities Class Action Complaint against certain of our former directors and officers, our former auditors and Tyco in the United States District Court for the District of New Hampshire. As to Tyco and certain of its former directors and officers, the complaint asserts causes of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and Section 14(a) of that Act and Rule 14a-9 promulgated thereunder, as well as Sections 11 and 12(a)(2) of the Securities Act of 1933. Claims against our former directors and officers are also asserted under Sections 20(a) and 20A of the Securities Exchange Act of 1934 and Section 15 of the Securities Act of 1933. The complaint asserts that the Tyco defendants violated the securities laws by making materially false and misleading statements and omissions concerning, among other things, the following: Tyco's mergers and acquisitions and the accounting therefor, as well as allegedly undisclosed acquisitions; misstatements of Tyco's financial results; the impact of a new accounting standard (SAB 101, promulgated in 1999) on our earnings performance; compensation of certain of our former executives; their improper use of our funds for personal benefit and their improper self-dealing real estate transactions; their sales of Tyco shares; payment of $20 million to one of our former directors and a charity of which he is a trustee; and the criminal investigation of our former Chief Executive Officer. The plaintiffs seek class certification, compensatory damages, rescission, disgorgement and attorneys' fees and expenses.

        On March 31, 2003, Tyco made a motion to dismiss the consolidated class action complaint. The other defendants moved to dismiss shortly thereafter. On October 14, 2004, the Court granted Tyco's motion, in part, and denied it in part. The Court granted Tyco's motion to dismiss Count II of the Consolidated Amended Complaint alleging a violation of Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder against all defendants. The Court denied Tyco's

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motion to dismiss Count I alleging a violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, as well as Counts V and VI alleging violations of Sections 11 and 12(a)(2) of the Securities Act of 1933. In addition, the Court granted former director Michael Ashcroft's motion to dismiss Count I alleging a violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, Counts III and IV alleging a violation of Sections 20(a) and 20A of the Securities Exchange Act of 1934, respectively, and Count VII alleging a violation of Section 14 of the Securities Act of 1933.

        A class action complaint was filed in the United States District Court for the Southern District of Florida, Ezra Charitable Trust v. Tyco International Ltd., on May 28, 2003, plaintiff purports to represent a class of purchasers of Tyco securities between December 30, 2002 and March 12, 2003. Plaintiff names as defendants Tyco and Edward D. Breen, Tyco's current Chairman and Chief Executive Officer. The complaint asserts a cause of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against both defendants. As against defendant Breen, the complaint asserts a cause of action under Section 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants violated the securities laws by making materially false and misleading statements and omissions concerning, among other things, Tyco's financial and operating condition and financial prospects for Tyco and its ADT business segment and the results of its investigation of its former management. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire. The Company has moved to dismiss the complaint, which remains pending before the court.

        On June 3, 2004, an action was filed in the Superior Court of the State of California for the County of Los Angeles, Hess v. Tyco International Ltd., et al. Plaintiffs name as additional defendants PricewaterhouseCoopers LLP, L. Dennis Koslowski, Mark H. Schwartz, Mark Belnick, Lord Michael A. Ashcroft, Joshua M. Berman, Richard S. Bodman, John F. Fort, Steven W. Foss, Wendy E. Lane, James S. Passman, W. Peter Slusser and Joseph F. Welch. Plaintiffs' complaint asserts claims of fraud, negligent representation, aiding and abetting, breach of fiduciary duty, tortious interference with fiduciary relationship and conspiracy arising out of an underlying settlement of litigation brought by shareholders in Progressive Angioplasty Systems, Inc. where the plaintiffs received Tyco stock as consideration. On September 27, 2004, the Company entered into a stipulation with the plaintiffs staying the litigation during the pendancy of plaintiffs' National Association of Securities Dealers, Inc. arbitration to which Tyco is not a party.

        Four plaintiffs filed a civil complaint in the United States District Court for the Eastern District of Michigan in Wilson v. Tyco International Ltd., et al. on June 3, 2003. Plaintiffs named as defendants Tyco International Ltd., Tyco International (US), Tyco Acquisition Corp. VII and Earth Tech EMS Holdings Inc., d/b/a Earth Tech. The complaint asserts causes of action for breach of contract, negligent misrepresentation, fraudulent misrepresentation and exemplary damages. Plaintiffs allege that during the course of negotiations for the acquisition of two companies by Earth Tech, a division of Tyco, defendants made material misrepresentations to plaintiffs and that after the contracts of sale had been finalized, breached material terms of the contracts. Plaintiffs also allege that defendants engaged in accounting manipulations that caused significant harm to the two companies and that, as a result, plaintiffs were denied fair payment for their companies, which lost fair market value. The Judicial Panel on Multidistrict Litigation conditionally transferred this action to the United States District Court for the District of New Hampshire. On December 9, 2003, however, the Judicial Panel on Multidistrict Litigation vacated the conditional transfer order and remanded this action to the United States District Court for the Eastern District of Michigan.

        A class action was filed on July 28, 2003 in the United States District Court for the District of New Jersey, Stumpf v. Tyco International, Ltd. et al. Plaintiff purports to represent a class of purchasers of TyCom, LTD ("TyCom") securities between July 26, 2000 and October 19, 2001. Plaintiff names as defendants Tyco, TyCom, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith, Citigroup and

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certain former Tyco and TyCom executives. The complaint asserts causes of action under Sections 11 and 15 of the Securities Act of 1933 and under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against Tyco, TyCom, and certain former executives. The complaint alleges the TyCom registration statement and prospectus was inaccurate, misleading and failed to disclose facts necessary to make the registration statement and prospectus not misleading. Further, the complaint alleges the defendants violated securities laws by making materially false and misleading statements and omissions concerning, among other things, executive compensation and Tyco's and TyCom's finances and business prospects. On November 10, 2003, the District Court of New Jersey granted one plaintiff's motion for appointment as lead plaintiff and consolidated the action with O'Loughlin v. Tyco International, Inc. et al., described below. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire.

        A class action was filed on September 26, 2003 in the United States District Court for the District of New Jersey, O'Loughlin v. Tyco International, Ltd. et al., purporting to represent a class of purchasers of TyCom securities between July 26, 2000 to October 19, 2001. Plaintiffs name as defendants Tyco, TyCom, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith, Citigroup and certain former Tyco and TyCom executives. The complaint asserts causes of action under Sections 11 and 15 of the Securities Act of 1933 and under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against Tyco, TyCom, and certain former executives. The complaint alleges the TyCom registration statement and prospectus was inaccurate, misleading and failed to disclose facts necessary to make the registration statement and prospectus not misleading. Further, the complaint alleges the defendants violated securities laws by making materially false and misleading statements and omissions concerning, among other things, executive compensation and Tyco's and TyCom's finances and business prospects. The Judicial Panel on Multidistrict Litigation has transfered this action to the United States District Court for the District of New Hampshire.

        As previously reported in our periodic filings, on November 27, 2002, the State of New Jersey, on behalf of several state pension funds, filed a complaint, New Jersey v. Tyco, in the United States District Court for the District of New Jersey against Tyco, our former auditors, and certain of our former directors and officers. The Judicial Panel on Multidistrict Litigation transferred the action to the United States District Court for the District of New Hampshire. On March 24, 2003, the plaintiffs filed an amended complaint. By order dated March 26, 2003, the District Court of New Hampshire assigned the case to the Securities Actions pending before it. As against all defendants, the amended complaint asserts causes of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, for common law fraud, aiding and abetting common law fraud, conspiracy to commit fraud and negligent misrepresentation. Claims are asserted against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934, Section 15 of the Securities Act of 1933, Section 24(d) of the New Jersey Uniform Securities Law, Sections 421-B:25(II) & (III) of the New Hampshire Uniform Securities Law, and for breaches of fiduciary duties. Claims are also asserted against certain of the individual defendants under Section 20A of the Securities Exchange Act of 1934; against Tyco under Section 12(a)(2) of the Securities Act of 1933, Section 24(c) of the New Jersey Uniform Securities Law, and the New Jersey RICO Statute on the basis of respondeat superior liability; against Tyco and certain of the individual defendants under Section 14(a) of the Securities Act of 1933 and Rule 14a-9 promulgated thereunder; and against Tyco, our former auditors, and certain of the individual defendants for violation of, aiding and abetting violation of, and conspiracy to violate the New Jersey RICO Statute. Finally, claims are asserted against the individual defendants and our former auditors for aiding and abetting the individual defendants' breaches of fiduciary duties. The amended complaint asserts that the defendants violated the securities laws and otherwise engaged in fraudulent acts by making materially false and misleading statements and omissions concerning, among other things, the following: unauthorized and improper compensation of certain of our former executives; their improper use of our funds for personal benefit and their improper self-dealing real estate

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transactions; their improper accounting practices; payment of $20 million to one of our former directors and a charity of which he is a trustee; criminal conduct of certain former executives; and the criminal investigation of our former Chief Executive Officer. Plaintiffs seek damages, including treble damages and punitive damages, along with attorneys' fees and costs.

        As previously reported in our periodic filings, in November 2002, a class action complaint, Schuldt Limited Partnership v. Tyco International Ltd., et al., was filed in the Circuit Court for Palm Beach County, Florida, asserting causes of action against Tyco and certain of our former directors and officers under the Securities Act of 1933. Defendants removed the case to the United States District Court for the Southern District of Florida. The complaint purports to bring suit on behalf of persons who exchanged their Sensormatic Electronics Corp. ("Sensormatic") stock for shares of Tyco in connection with our acquisition of Sensormatic. The complaint alleges that the registration statement filed in connection with the Sensormatic acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor. Plaintiff seeks class certification, compensatory damages and attorneys' fees and expenses. The Judicial Panel on Multidistrict Litigation has transferred the action to the United States District Court for the District of New Hampshire. Plaintiff has moved to have the action remanded to the Florida state court.

        As previously reported in our periodic filings, in December 2002, four additional class action complaints were filed in the Circuit Court for Palm Beach County, Florida: (1) Hromyak v. Tyco International Ltd., et al.; (2) Rappold v. Tyco International Ltd., et al.; (3) Myers v. Tyco International Ltd., et al.; and (4) Goldfarb v. Tyco International Ltd., et al. Plaintiffs in each of these actions also assert claims against Tyco, certain of our former directors and officers, and in three instances our former auditors under the Securities Act of 1933, and seek class certification, compensatory damages and attorneys' fees and expenses. Defendants removed these four actions from Florida state court to the United States District Court for the Southern District of Florida. The Judicial Panel on Multidistrict Litigation transferred the actions to the United States District Court for the District of New Hampshire. Plaintiffs in these actions have moved to have their cases remanded to the Florida state court.

        The Hromyak complaint purports to bring suit on behalf of persons who exchanged their United States Surgical Corporation ("U.S. Surgical") stock for shares of Tyco in connection with our acquisition of U.S. Surgical in or about October of 1998. The complaint alleges that the registration statement filed in connection with the U.S. Surgical acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor.

        The Rappold complaint purports to bring suit on behalf of persons who exchanged their InnerDyne, Inc. ("InnerDyne") stock for shares of Tyco in connection with our acquisition of InnerDyne in or about December of 2001. The complaint alleges that the registration statement filed in connection with the InnerDyne acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor.

        The Myers complaint purports to bring suit on behalf of persons who exchanged their TyCom shares for shares of Tyco in connection with our acquisition of TyCom in or about December of 2001. The complaint alleges that the registration statement filed in connection with the TyCom acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor.

        The Goldfarb complaint purports to bring suit on behalf of persons who exchanged their Scott Technologies, Inc. ("Scott") stock for shares of Tyco in connection with our acquisition of Scott in or about May of 2001. The complaint alleges that the registration statement filed in connection with the

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Scott acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor.

        As previously reported in our periodic filings, in January 2003, an additional class action complaint was filed in the Circuit Court for Palm Beach County, Florida, Mandel v. Tyco International Ltd., asserting causes of action against Tyco and certain of our former officers and directors. The complaint purports to bring suit on behalf of persons who exchanged their Mallinckrodt, Inc. ("Mallinckrodt") stock for shares of Tyco in connection with our acquisition of Mallinckrodt in October 2000. The complaint alleges that the registration statement filed in connection with the Mallinckrodt acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire. Plaintiff has moved to have the action remanded to the Florida state court.

        A class action was filed in the Circuit Court of Cook County, Illinois in June 2002, Brazen v. Tyco International Ltd., et al. Plaintiff asserts claims under the Securities Act of 1933, and seeks class certification, compensatory damages and attorneys' fees and expenses. Plaintiff purports to bring suit on behalf of persons who exchanged their Mallinckrodt Inc. stock for shares of Tyco in connection with the October 17, 2000 merger of the two companies. The complaint alleges that the registration statement filed in connection with the Mallinckrodt acquisition contained false and misleading statements concerning, among other things, financial disclosures concerning certain of our mergers and acquisitions and accounting therefor. The defendants removed the action from Illinois state court to the United States District Court for the Northern District of Illinois. The plaintiff moved to have his action remanded to the Illinois state court. In December 2002, the Judicial Panel on Multidistrict Litigation transferred the action to the United States District Court for the District of New Hampshire. On August 7, 2003, plaintiff renewed his motion for remand, and on August 25, 2003, Tyco opposed the motion. The motion is pending before the Court.

        On June 21, 2004 the United States District Court for the District of New Hampshire granted plaintiffs' motion in Brazen v. Tyco International Ltd., Hromyak v. Tyco International Ltd., Goldfarb v. Tyco International Ltd., Mandel v. Tyco International Ltd., Myers v. Tyco International Ltd., Rappold v. Tyco International Ltd., and Schuldt v. Tyco International Ltd., which were consolidated for pretrial proceedings in the district court, to remand their cases to the state courts in which they were originally filed. The Company has appealed to the United States Court of Appeals for the First Circuit the district court's decision to remand Brazen to the Cook County Circuit Court and Hromayk, Goldfarb, Mandel, Myers, Rappold and Schuldt to the Palm Beach Circuit Court.

        On January 31, 2003 a civil action was filed in the United States District Court for the District of New Jersey, Cirella v. Tyco International et al. Plaintiff names as defendants Tyco International Ltd., Dennis Kozlowski, Mark H. Swartz and Mark A. Belnick. Plaintiff Philip M. Cirella alleges that he was a shareholder in CIT who received common shares of Tyco when it acquired CIT in 2000, and later purchased additional Tyco shares with Marguerite Cirella. Plaintiffs assert a cause of action against all defendants for violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and a cause of action against the individual defendants for violation of Section 20(a) of the Exchange Act. The complaint alleges that the defendants failed to disclose related-party transactions, including the following: providing interest free loans, forgiving personal loans, purchasing personal properties, using company funds to purchase personal items, selling individual Tyco shares while concealing information from investors, and failing to disclose an ongoing criminal investigation of Kozlowski, all of which resulted in an artificially inflated share price. Plaintiffs seek compensatory damages and costs against all defendants and punitive exemplary damages against the individual defendants. The Judicial Panel on Multidistrict Litigation has transferred the action to the United States District Court for the District of New Hampshire.

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        An action was filed on January 20, 2004 in the United States District Court for the Southern District of New York, Ballard v. Tyco International Ltd., et al. Plaintiffs are former AMP shareholders who received Tyco stock in connection with Tyco's merger with AMP. Plaintiffs name as defendants Tyco International Ltd., PricewaterhouseCoopers LLP, former officers L. Dennis Kozlowski, Mark Swartz, Mark Belnick and former directors Frank Walsh and Michael Ashcroft. The complaint asserts causes of action under Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934, Sections 11 and 12 (a)(2) of the Securities Act of 1933, common law fraud and negligent misrepresentation. The complaint seeks an award of compensatory and exemplary damages. Tyco has requested the Judicial Panel on Multidistrict Litigation transfer the action to the United States District Court for the District of New Hampshire. The Company has moved to dismiss the complaint, which remains pending before the court.

        A class action was filed on December 9, 2003, in the Circuit Court of Cook County, Illinois, Davis v. Kozlowski, et al. purporting to represent a class of persons who held Tyco securities prior to December 13, 1999 through June 3, 2002. Plaintiff names as defendants L. Dennis Kozlowski, Mark Swartz, Mark Belnick, Frank Walsh, Michael Ashcroft, PricewaterhouseCoopers LLP, Phua Young and Merrill Lynch, Pierce, Fenner & Smith Incorporated. The complaint asserts claims of common law fraud against all defendants, breach of fiduciary duties against individual defendants, negligent misrepresentation against PricewaterhouseCoopers and aiding and abetting a breach of fiduciary duty against PricewaterhouseCoopers and Merrill Lynch, Pierce, Fenner & Smith. The Company has removed the complaint to the United States District Court for the Northern District of Illinois and the Judicial Panel on Multidistrict Litigation has transfered the action to the United States District Court for the District of New Hampshire. The plaintiff has moved to remand the case to the Circuit Court of Cook County, Illinois, which motion remains pending before the court.

        On September 30, 2003, a complaint, Sciallo v. Tyco International Ltd., et al., was filed in the United States District Court for the Southern District of New York. The plaintiffs purport to be former executives of U.S. Surgical who traded their U.S. Surgical stock options for Tyco International, Ltd. stock options when Tyco acquired U.S. Surgical on October 1, 1998. Plaintiffs name as defendants Tyco International Ltd. and certain former Tyco directors and executives. The complaint asserts causes of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, for common law fraud and negligence, and violation of New York General Business Law Section 349, which prohibits deceptive acts and practices in the conduct of any business. The complaint alleges that defendants made materially false and misleading statements and omissions concerning, among other things, Tyco's financial condition and accounting practices. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire.

        On September 2, 2004, a complaint was filed in the Court of Common Pleas for Dauphin County, Pennsylvania, Jasin v. Tyco International Ltd., et. al. This pro se plaintiff named as additional defendants Tyco International (US) Inc., L. Dennis Kozlowski, our former Chairman and Chief Executive Officer, Mark H. Swartz, our former Chief Financial Officer and Juergen W. Gromer, currently President of Tyco Electronics. Plaintiff's complaint asserts causes of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, as well as Section 11 of the Securities Act of 1933. Claims against Messrs. Kozlowski, Swartz and Gromer are also asserted under Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder and Section 20A of the Securities Exchange Act of 1934, as well as Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. Plaintiff also asserts common law fraud, negligent misrepresentation, unfair trade practice, breach of contract, breach of the duty of good faith and fair dealing and violation of Section 1-402 of the Pennsylvania Securities Act of 1972. Tyco has removed the complaint to the United States District Court for the Middle District of Pennsylvania. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire. The plaintiff has moved to vacate the conditional transfer order.

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        On September 27, 2004, an amended action was filed in the United States District Court for the Middle District of North Carolina, Hall v. Tyco International Ltd., et. al. This pro se plaintiff names as additional defendants, Tyco International (US) Inc., Tyco Electronics, AMP, Inc. and The Retirement Committee of Tyco International (US) Inc. Plaintiff's complaint asserts claims of breach of contract and securities fraud. The Judicial Panel on Multidistrict Litigation has been notified that this may be an action that should be transferred to the United States District Court for the District of New Hampshire.

Shareholder Derivative Litigation

        As previously reported in our periodic filings, numerous actions have been filed purporting to bring suit derivatively on behalf of Tyco against certain former officers and certain former directors of Tyco and against Tyco as a nominal defendant. Three such actions were pending as of the filing of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004, all of which have since been dismissed as discussed below.

        On June 18, 2002, an action, Shelley Evans v. L. Dennis Kozlowski, et al., was filed in the United States District Court for the District of New Hampshire, alleging that the individually named defendants breached their fiduciary duties and committed waste and mismanagement in connection with the compensation of certain board members and their use of corporate assets for their own benefit. Plaintiff sought money damages, declaratory relief, and the removal and replacement of the director defendants. The court dismissed this action in its entirety against all defendants on October 14, 2004.

        On June 21, 2002, an action, Joan L. Weisberg v. L. Dennis Kozlowski, et al., was filed in the United States District Court for the Southern District of New York, alleging that the individually named defendants breached their fiduciary duties and committed waste in connection with Tyco's accounting practices, individual board members' use of funds, and the compensation of certain board members. Plaintiff sought money damages, injunctive relief, and an equitable accounting. Defendants requested that the Judicial Panel on Multidistrict Litigation treat this as a related action and transfer the suit to the District of New Hampshire for coordinated or consolidated pretrial proceedings. The court dismissed this action in its entirety against all defendants on October 14, 2004.

        On August 2, 2002, an action, Paul Manko v. L. Dennis Kozlowski, et al., was filed in the United States District Court for the District of New Hampshire, alleging that the individually-named defendants breached their fiduciary duties and committed waste and mismanagement in connection with Tyco's accounting practices, individual board members' use of funds, and the Company's financial disclosures. Plaintiffs sought summary damages. The court dismissed this action in its entirety against all defendants on October 14, 2004.

ERISA Litigation and Investigation

        As previously reported in our periodic filings, Tyco and certain of our current and former employees, officers and directors, have been named as defendants in eight class actions brought under the Employee Retirement Income Security Act ("ERISA"). The complaints purported to bring claims on behalf of the Tyco International (US) Inc. Retirement Savings and Investment Plans ("the Plans") and the participants therein.

        Two of the actions, Peterson v. Tyco International Ltd. and Swanson v. Tyco International Ltd., were filed in the United States District Court for the District of New Hampshire, and the six remaining actions, Overby v. Tyco, Dunne v. Tyco, Jepson v. Tyco, Gordon v. Tyco, Konyn v. Tyco and Johnson v. Tyco, were transferred to that Court by the Judicial Panel on Multidistrict Litigation. All eight actions have been consolidated in the District Court in New Hampshire.

        On February 3, 2003, the plaintiffs filed a Consolidated Amended Complaint, Overby v. Tyco, asserting causes of action under ERISA. That complaint named as defendants Tyco and certain of its

19

present and former officers and directors, its wholly-owned subsidiary Tyco International (US) Inc., its retirement committee, and certain of its present and former officers, directors and employees. The complaint asserts that the defendants breached their fiduciary duties under ERISA by negligently misrepresenting and negligently failing to disclose material information concerning, among other things, the following: related-party transactions and executive compensation; Tyco's mergers and acquisitions and the accounting therefor, as well as allegedly undisclosed acquisitions; and misstatements of Tyco's financial results. The complaint also asserts that the defendants breached their fiduciary duties by allowing the Plans to invest in Tyco shares when it was not a prudent investment. The plaintiffs seek a declaration that the defendants are not entitled to protection under ERISA's safe harbor provision; an order compelling the defendants to make good to the Plans all losses caused by the defendants' alleged breaches of fiduciary duty; imposition of a constructive trust on any amounts by which any defendant was unjustly enriched; an order enjoining future violations of ERISA; actual damages in the amount of any losses the Plans suffered; costs and attorneys' fees; and an order for equitable restitution and other appropriate equitable monetary relief.

        On April 4, 2003, Tyco and several other defendants moved to dismiss the consolidated complaint. Shortly thereafter the other defendants also moved to dismiss. On November 6, 2003, the plaintiffs filed a motion seeking to add eleven current and former employees as defendants. On December 2, 2004, the United States District Court for the District of New Hampshire granted Tyco's motion, in part, and denied it in part. The court granted Tyco's motion to dismiss two employee defendants, all former directors of Tyco International Ltd. and the former officers of Tyco International Ltd., other than the former Chief Executive Officer, as defendants in the case. The court also dismissed Count II asserting negligent misrepresentation claims against Tyco International Ltd. and its former Chief Executive Officer. The court denied Tyco's motion to dismiss Count I alleging breach of fiduciary duty against Tyco International Ltd., Tyco International (US) Inc., the Board of Directors of Tyco International (US) Inc., the Tyco (US) Retirement Committee and the former Chief Executive Officer of Tyco International Ltd, as well as Count II alleging negligent misrepresentation against Tyco International (US) Inc., the Tyco (US) Retirement Committee and the Board of Directors of Tyco International (US) Inc.

        In addition, Tyco and certain of our current and former executives have received requests from the United States Department of Labor for information concerning the administration of the Tyco International (US) Inc. Retirement Savings and Investment Plans. The current focus of the Department's inquiry concerns losses allegedly experienced by the plans due to investments in our shares. The Department of Labor has authority to bring suit on behalf of the Plans and their participants against those acting as fiduciaries to the Plans for recovery of losses and additional penalties, although it has not informed us of any intention to do so.

Tyco Litigation Against Former Senior Management

Tyco International Ltd v. Mark A. Belnick, United States District Court, Southern District of New York, No. 02-CV-4644, filed June 17, 2002. As previously reported in our periodic filings, we have filed a civil complaint against our former Executive Vice President and Chief Corporate Counsel for breach of fiduciary duty and other wrongful conduct. The action alleges that the defendant: solicited and accepted cash and share bonuses without Board approval; took interest-free loans from our relocation program without Board approval; failed to disclose to the Board and to the Securities and Exchange Commission ("SEC") his Retention Agreement and compensation; failed to advise the Board of the improper conduct of other officers; refused to cooperate with internal investigations; and engaged in other improper conduct. The complaint asserts causes of action for breach of fiduciary duty, inducement to breach fiduciary duty, conspiracy to breach fiduciary duty, fraud and other wrongful conduct and seeks to recover compensation and profits received from employment at Tyco, repayment of all loans fraudulently procured, with interest, damages for the harm caused to us, and punitive

20

damages. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire.

        On October 21, 2002, in a related proceeding, Mark Belnick has commenced an arbitration proceeding in New York County, New York seeking to enforce the terms of an alleged executive retention agreement with the Company and to recover unspecified damages. The Company has not filed an answer to the statement of claim.

Tyco International Ltd. v. Frank E. Walsh, Jr., United States District Court, Southern District of New York, No. 02-CV-4633, filed June 17, 2002. As previously reported in our periodic filings, we have filed a civil complaint against a former director for breach of fiduciary duty and related wrongful conduct involving a $20 million payment in connection with a 2001 acquisition by Tyco. The action alleges causes of action for restitution, breach of fiduciary duty and inducing breach of fiduciary duty, conversion, unjust enrichment, and a constructive trust, and seeks recovery for all of the losses suffered by us as a result of the defendant director's conduct. On December 17, 2002, Mr. Walsh paid $20 million in restitution to Tyco, which was deposited by the Company in January 2003, as a result of a plea bargain agreement with the New York County District Attorney. Our claims against Mr. Walsh are still pending. Discovery in this action has been stayed as a result of a motion by the New York County District Attorney's Office. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire.

Tyco International Ltd. v. L. Dennis Kozlowski, United States District Court, Southern District of New York, No. 02-CV-7317, filed September 12, 2002, Amended April 1, 2003. As previously reported in our periodic filings, we have filed a civil complaint against our former Chairman and Chief Executive Officer for breach of fiduciary duty and other wrongful conduct. The Company amended that complaint on April 1, 2003. The amended complaint alleges that the defendant misappropriated millions of dollars from our Key Employee Loan Program and relocation program; awarded millions of dollars in unauthorized bonuses to himself and certain other Tyco employees; engaged in improper self-dealing real estate transactions involving our assets; and conspired with certain other former Tyco employees in committing these acts. The amended complaint alleges causes of action for breach of fiduciary duty, fraud, unjust enrichment, breach of contract, conversion, a constructive trust, and other wrongful conduct. The amended complaint seeks recovery for all of the losses suffered by us as a result of the former Chairman and Chief Executive Officer's conduct, and of all remuneration, including restricted and unrestricted shares and options, obtained by Mr. Kozlowski during the course of this conduct. Discovery in this action has been stayed as a result of a motion by the New York County District Attorney's Office. The Judicial Panel on Multidistrict Litigation transferred this action to the United States District Court for the District of New Hampshire.

Tyco International Ltd. v. Mark H. Swartz, United States District Court, Southern District of New York, No. 03-CV-2247 (TPG), filed April 1, 2003. As previously reported in our periodic filings, we filed an arbitration claim against Mark H. Swartz, our former Chief Financial Officer and director, on October 7, 2002. That arbitration claim alleged that Mr. Swartz breached his fiduciary duty and otherwise engaged in wrongful conduct relating to his employment by Tyco. As a consequence of Mr. Swartz's refusal to submit to the jurisdiction of the American Arbitration Association, we filed a civil complaint against him on April 1, 2003, for breach of fiduciary duty and other wrongful conduct. The action alleges that the defendant misappropriated millions of dollars from our Key Employee Loan Program and relocation program; approved and implemented awards of millions of dollars in unauthorized bonuses to himself and certain other Tyco employees; awarded millions of dollars in other unauthorized payments to himself; engaged in improper self-dealing real estate transactions involving our assets; and conspired with certain other former Tyco employees in committing these acts. The complaint alleges causes of action for breach of fiduciary duty, fraud, unjust enrichment, conversion, a constructive trust, and other wrongful conduct. The action seeks recovery for all of the losses suffered by us as a result of the former Chief Financial Officer and director's conduct, and of all remuneration,

21

including restricted and unrestricted shares and options, obtained by Mr. Swartz during the course of this conduct. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire. Mr. Swartz moved to dismiss Tyco's complaint and to compel arbitration of the parties' respective claims. The court denied Swartz' motion and he has appealed the court's decision to the United States Court of Appeals for the First Circuit.

Tyco International, Ltd. v. L. Dennis Kozlowski and Mark H. Swartz, United States District Court Southern District of New York, No. 02-CV-9705, filed December 6, 2002. As previously disclosed in our periodic filings, we have filed a civil complaint against our former Chairman and Chief Executive Officer and our former Chief Financial Officer pursuant to Section 16(b) of the Securities Exchange Act of 1934 for disgorgement of short-swing profits from prohibited transactions in our common shares believed to exceed $40 million. The action seeks disgorgement of profits, interest, attorneys' fees and costs. The Judicial Panel on Multidistrict Litigation has transferred this action to the United States District Court for the District of New Hampshire.

Subpoenas and Document Requests From Governmental Entities

        As previously disclosed in our periodic filings, we and others have received various subpoenas and requests from the SEC, the District Attorney of New York County, the U.S. Attorney for the District of New Hampshire and others seeking the production of voluminous documents in connection with various investigations into our governance, management, operations, accounting and related controls. We are cooperating with these investigations and are complying with these requests.

        Certain current and former employees in Fire and Security received subpoenas from the SEC's Division of Enforcement seeking testimony related to past accounting practices for the ADT dealer connect fees. As previously reported in our periodic filings, these practices have been discontinued.

        The United States Department of Labor served document subpoenas on Tyco and Fidelity Management Trust Company for documents concerning the administration of the Tyco International (US) Inc. Retirement Savings and Investment Plans. The current focus of the Department's inquiry remains the losses allegedly experienced by the plans due to investments in our stock. The Department of Labor has authority to bring suit on behalf of the plans and their participants against those acting as fiduciaries to the plans for recovery of losses and additional penalties, although it has not informed us of any intention to do so. The Company is continuing to cooperate with the Department's investigation.

        In November 2004, we received an order from the SEC to report facts and circumstances involving our participation, if any, in the United Nations Oil for Food Program governing sales of Iraqi oil. We are gathering information responsive to the order and will fully cooperate in ongoing investigations.

Intellectual Property Litigation

Mallinckrodt, Inc. ("Mallinckrodt") and Nellcor Puritan Bennett, Inc. ("Nellcor"), plaintiffs/counter-defendants v. Masimo Corporation ("Masimo") et al., defendants/counter-claimants, is a consolidated patent infringement action in the United States District Court for the Central District of California. Nellcor alleges that Masimo infringed one Nellcor patent related to pulse oximeters, which are medical devices used to measure blood oxygen levels in patients, and Masimo alleges that Nellcor infringed four Masimo patents related to pulse oximeters. Trial in the action commenced on February 18, 2004. On March 16, 2004, the jury returned a liability finding that Nellcor willfully infringed the four Masimo patents and that Masimo did not infringe the one Nellcor patent. On March 26, 2004, the jury awarded Masimo $134.5 million in damages for Nellcor's alleged infringement through December 31, 2003. After hearing post-trial motions, the district court issued an order on July 14, 2004 which (i) denied Masimo's request to impose an injunction on the sale of pulse oximeters; (ii) reversed the jury finding of patent infringement for one of the four patents at issue; (iii) ruled that a second patent was unenforceable due to Masimo's inequitable conduct in seeking the patent; and (iv) overturned the jury finding that the infringement was "willful." On August 6, 2004, the district court entered final judgment

22

that included additional damages of $29.5 million for Nellcor's alleged infringement from January 1, 2004 through May 31, 2004. Nellcor is appealing the jury's infringement finding on the remaining two Masimo patents to the United States Court of Appeals for the Federal Circuit. The briefing for the appeal is scheduled to be completed by February 28, 2005. The Court of Appeals has not yet scheduled oral argument for the appeal. Tyco has assessed the status of this matter and has concluded that it is more likely than not that the jury's decision will be overturned and, further, Tyco intends to vigorously pursue all available means to achieve such reversal. Accordingly, no provision has been made in Tyco's Consolidated Financial Statements with respect to this damage award.

Masimo Corporation v. Tyco Healthcare Group LP ("Tyco Healthcare") and Mallinckrodt, Inc. is a separate lawsuit also pending in the United States District Court for the Central District of California. Tyco Healthcare and Mallinckrodt are subsidiaries of Tyco. In this lawsuit, Masimo alleges violations of antitrust laws against Tyco Healthcare and Mallinckrodt in the markets for pulse oximeter products. Masimo alleges that Tyco Healthcare and Mallinckrodt used their market position to prevent hospitals from purchasing Masimo's pulse oximetry products. Masimo seeks injunctive relief and monetary damages, including treble damages. Trial is scheduled to begin on February 22, 2005. At this time, Tyco cannot predict the outcome of the antitrust case and, therefore, it is not possible to estimate the amount of loss or the range of potential losses that might result from an adverse judgment or settlement in this matter. It is possible that Tyco will be required to pay an award of damages in the antitrust lawsuit.

Applied Medical Resources Corp. ("Applied Medical") v. United States Surgical ("U.S. Surgical") is a patent infringement action in which U.S. Surgical, a subsidiary of Tyco, is the defendant. In February 2002, the United States District Court for the Central District of California held that U.S. Surgical's VERSASEAL universal seal system, contained in certain surgical trocar and access devices manufactured by U.S. Surgical, infringed certain of the plaintiff's patents. The district court entered a permanent injunction against U.S. Surgical based upon infringement of one of the three patents involved in the suit. The United States Court of Appeals for the Federal Circuit affirmed the district court's permanent injunction ruling in September 2003 for the VERSASEAL product, which is no longer on the market. In October 2003, the district court ruled in U.S. Surgical's favor, holding that two other patents involved in the case were invalid. A trial on damages for the earlier infringement ruling in the district court concluded on July 27, 2004. The jury awarded Applied Medical $43.5 million in damages and returned a finding that the earlier infringement was willful, giving the district court discretion to enhance those damages to up to treble the damages awarded to Applied Medical by the jury. On October 1, 2004, the district court issued post-trial rulings that (i) denied U.S. Surgical's motion to set aside the jury's finding on willfulness; and (ii) granted Applied Medical's motion for enhanced damages, enhancing the jury's damages award by 25%, or $11 million. The district court will also consider during post trial proceedings what pre-judgment interest, if any, should be awarded, and whether Applied Medical is entitled to an award of attorneys' fees. After the proceedings are completed at the district court, U.S. Surgical will appeal the damages award and the willfulness finding to the court of appeals. Tyco has recorded a liability related to this matter and does not expect to incur material losses beyond what has already been accrued.

        On July 31, 2003, Applied Medical filed another patent infringement suit against U.S. Surgical in the United States District Court for the Central District of California. The complaint alleges that U.S. Surgical's VERSASEAL Plus trocar product infringes Applied Medical's U.S. Patent No. 5,385,533. Applied Medical seeks injunctive relief and unspecified monetary damages, including enhanced damages for alleged willful infringement. Applied Medical filed a motion for a preliminary injunction, which the district court denied on December 23, 2003. Trial is currently scheduled to commence in March 2005. At this time, Tyco cannot predict the outcome of this patent infringement case and, therefore, it is not possible to estimate the amount of loss or range of potential losses that might result from an adverse judgment or settlement in this matter.

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Environmental Litigation

        On August 17, 2004, Tyco Printed Circuit Group, Limited Partnership ("TPCG"), a business within our Electronics segment, was sentenced for Clean Water Act violations at three of its manufacturing facilities in Connecticut, pursuant to which it has paid a $6 million fine and an additional $4 million to fund environmental projects designed to improve the environment for Connecticut residents. TPCG will also implement an environmental compliance plan at all TPCG printed circuit board manufacturing locations in the United States to supplement existing environmental compliance programs and engage an independent third party to conduct an environmental audit of two TPCG manufacturing facilities in Connecticut. The United States Attorney's Office for the District of Connecticut has stated in a publicly filed court submission that there was no concrete evidence of environmental harm as a result of these violations and that no one above the position of environmental health and safety manager at TPCG at its Connecticut facilities knew of, or was involved in, these violations.

        In September 2004, the Connecticut State Superior Court in Hartford, Connecticut entered a stipulated judgment executed by and among TPCG, the Connecticut Commissioner of the Department of Environmental Protection (the "DEP") and the Connecticut Attorney General's Office with respect to a civil suit against TPCG, which suit alleged violations of Connecticut environmental statutes and regulations arising out of the conduct investigated by the federal authorities at these same three facilities. Pursuant to this stipulated judgment, TPCG paid a $2 million civil penalty to the DEP in October 2004, and will implement capital improvements to reduce the volume of wastewater discharged from its manufacturing facilities in Connecticut.

        On certain dates in 2002 and 2003, a business within our Engineered Products and Services segment reported purportedly incorrect data relating to landfill gas monitoring at four landfill sites in Ohio. Our business is the contractor providing landfill gas monitoring and operations services at those sites. The reporting of this purportedly incorrect data may form the basis for potential violations of the Clean Air Act and related state laws and regulations. To our knowledge, no action or proceeding has been filed by any state or federal authority in this matter to date. We have disclosed this matter to our clients involved and to the City of Toledo, the Ohio Environmental Protection Agency and the United States Environmental Protection Agency.

        On July 8, 2003, a fire accidentally ignited inside an oil storage tank that our Earth Tech subsidiary was demolishing at a power plant in Moss Landing, California. No injuries resulted from the fire. Earth Tech has settled a civil enforcement action commenced by the Monterey County District Attorney's Office and has paid a total amount of $900,000 in civil penalties and restitution. Additionally, as part of this civil settlement, Earth Tech has agreed to spend a minimum of $300,000 on employee education, training and compliance related to safety, health and environmental requirements and procedures.

Commercial Litigation

Sensormatic v. Winner and Bagnara, Inc. is a franchise dispute for which Sensormatic originally filed a complaint in 1999 in the United States District Court for the Western District of Pennsylvania seeking declaratory relief. On June 28, 2004, the district court entered a stipulated judgment fixing the amount of the defendant's past damages and commissions for royalties allegedly owed under the franchise agreement in the amount of $28 million, plus $5 million in pre-judgment interest, and the entry of an injunction requiring Sensormatic to tender the franchise to the defendant. The judgment stays the imposition and payment of these damages and injunctive relief until resolution of an appeal of the district court's underlying rulings on liability to the United States Court of Appeals for the Third Circuit. In the event the district court's rulings are affirmed, Sensormatic will be required to pay the amount of stipulated damages and tender the franchise. On June 29, 2004, Sensormatic filed its Notice of Appeal to the court of appeals. Tyco intends to vigorously pursue all available means to achieve a reversal. The company does not expect to incur material losses beyond what has already been accrued.

Item 4.    Submission of Matters to a Vote of Security Holders

        None.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
        Purchases of Equity Securities

        The number of registered holders of Tyco's common shares at December 7, 2004 was 48,788.

        Tyco common shares are listed and traded on the New York Stock Exchange ("NYSE") and the Bermuda Stock Exchange under the symbol "TYC." The following table sets forth the high and low closing sales prices of Tyco common shares as reported by the NYSE, and the dividends paid on Tyco common shares, for the quarterly periods presented below.

	Year Ended September 30, 2004						Year Ended September 30, 2003
	Market Price Range						Market Price Range
Quarter					Dividend Per Common Share						Dividend Per Common Share
	High		Low				High		Low
First	$	26.85	$	20.70	$	0.0125	$	18.70	$	11.90	$	0.0125
Second		30.06		26.48		0.0125		18.34		11.20		0.0125
Third		33.14		27.39		0.0125		20.20		12.84		0.0125
Fourth		32.70		29.66		0.0125		22.00		17.75		0.0125
					$	0.0500					$	0.0500

Dividend Policy

        We may from time to time enter into financing agreements that contain financial covenants and restrictions, some of which may limit the ability of Tyco to pay dividends. Future dividends on our common shares, if any, will be at the discretion of Tyco's Board of Directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant. On December 9, 2004, the Board of Directors approved an increase in the quarterly dividend on our common shares from $0.0125 to $0.10 per share. The dividend is payable on February 1, 2005 to shareholders of record as of January 3, 2005.

Issuer Purchase of Equity Securities

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs
7/1/04–7/31/04(1)	1,657	$	31.97	—	—
8/1/04–8/31/04(2)	15,362,200	$	33.04	15,362,200	—
9/1/04–9/30/04(2)	7,329,964	$	33.04	7,329,964	—

⁽¹⁾

Transactions represent the purchase of restricted shares from employees to satisfy tax withholding requirements on such equity-based transactions. None of these transactions were made in the open market. The average price paid per share is based upon the high and low closing sales prices on the NYSE on the date of the transaction.

⁽²⁾

Transactions represent the repurchase of a portion of the Company's outstanding convertible debt prior to its scheduled maturity. (See Note 15 to the Consolidated Financial Statements). The average price paid per share is calculated by dividing the total cash paid for the debt by the number of underlying shares of the debt.

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Item 6.    Selected Financial Data

        The following table sets forth selected consolidated financial data of Tyco. This data is derived from Tyco's consolidated financial statements for the five years ended September 30, 2004. This selected financial data should be read in conjunction with Tyco's Consolidated Financial Statements and related notes included elsewhere in this Annual Report as well as the section of this Annual Report titled Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

			2004(1)		2003(2)(3)			2002(4)			2001(5)(7)(9)			2000(8)(9)
			(in millions, except per share data)
Consolidated Statements of Operations Data:
	Net revenue		$	40,153	$	35,987		$	34,824		$	33,421		$	28,203
	Income (loss) from continuing operations			3,005		1,035			(2,851	)		3,868			4,273
	Cumulative effect of accounting change, net of income taxes			—		(75	)		—			(683	)		—
		Net income (loss)		2,879		980			(9,180	)		3,464			4,319
Basic earnings (loss) per share:
	Income (loss) from continuing operations			1.50		0.52			(1.43	)		2.14			2.53
	Cumulative effect of accounting change			—		(0.04	)		—			(0.38	)		—
		Net income (loss)		1.44		0.49			(4.62	)		1.92			2.56
Diluted earnings (loss) per share:
	Income (loss) from continuing operations			1.41		0.52			(1.43	)		2.11			2.49
	Cumulative effect of accounting change			—		(0.04	)		—			(0.37	)		—
		Net income (loss)		1.35		0.49			(4.62	)		1.89			2.52
Cash dividends per share(10)				0.05		0.05			0.05			0.05			0.05
Consolidated Balance Sheets Data (End of Period):
	Total assets		$	63,667	$	62,997		$	65,500		$	70,413		$	39,996
	Long-term debt			14,617		18,251			16,528			19,596			9,462
	Shareholders' equity			30,292		26,369			24,081			31,080			16,613

⁽¹⁾

Income from continuing operations for the year ended September 30, 2004 includes net restructuring charges of $256 million, charges for the impairment of long-lived assets of $99 million, a loss of $284 million related to the retirement of debt and a charge of $116 million related to divestitures. Net income also includes a $3 million loss, net of income taxes, from discontinued operations and a $123 million loss on sale of discontinued operations, net of income taxes.

⁽²⁾

In 2003, Tyco consolidated variable interest entities in accordance with the transition provisions of FIN 46, as more fully described in Note 9 to the Consolidated Financial Statements. As a result, Tyco recorded a cumulative effect adjustment of $75 million, net of income taxes.

⁽³⁾

Income from continuing operations for the year ended September 30, 2003 includes charges for the impairment of long-lived assets of $815 million, charges for changes in estimates of $389 million which arose from the Company's intensified internal audits and detailed controls and operating reviews (includes net restructuring credits of $72 million and charges for the impairment of long-lived assets of $10 million), other charges of $148 million, charges for the impairment of goodwill of $278 million, a net loss related to the retirement of debt of $128 million, a charge of $91 million for a retroactive incremental premium on prior period directors and officers insurance, a charge of $12 million relating to the write-down of investments, other interest expense of $2 million, other interest income of $19 million, and net restructuring credits of $12 million. Net income also includes $20 million of income, net of income taxes, from discontinued operations.

⁽⁴⁾

Loss from continuing operations for the year ended September 30, 2002 includes net restructuring and other charges of $1,872 million, charges of $3,310 million for the impairment of long-lived assets, goodwill impairment charges of $1,344 million, and a charge for the write-off of purchased research and development

26

of $18 million. In addition, loss from continuing operations for the year ended September 30, 2002 includes a loss on investments of $271 million, a net gain on divestiture of $24 million and $30 million of income relating to the retirement of debt. Net loss also includes a $6,270 million loss, net of income taxes, from discontinued operations and a $59 million loss on sale of discontinued operations for the year ended September 30, 2002.

⁽⁵⁾

In 2001, Tyco changed its revenue recognition accounting policy to conform to the requirements of Staff Accounting Bulletin No. 101 issued by the Staff of the Securities and Exchange Commission. As a result, Tyco recorded a cumulative effect adjustment of $654 million, net of income taxes. Pro forma amounts for 2000 have not been presented since the effect of the change in accounting principles for that period could not be reasonably determined. In 2001, Tyco also recorded a cumulative effect adjustment of $29 million, net of income taxes, in accordance with the transition provisions of Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities."

⁽⁶⁾

Income from continuing operations for the year ended September 30, 2001 includes a net charge of $585 million for restructuring and other charges, a charge for the write-off of purchased in-process research and development of $184 million and charges of $120 million for the impairment of long-lived assets. Income from continuing operations for the year ended September 30, 2001 also includes a net gain on sale of businesses of $410 million, a loss on investments of $134 million, a loss of $26 million relating to the retirement of debt and a net gain on the sale of common shares of a subsidiary of $25 million. Net income includes $280 million of income, net of income taxes, from discontinued operations for the year ended September 30, 2001.

⁽⁷⁾

The increase in assets in 2001 is primarily attributable to the acquisition of The CIT Group, Inc. ("CIT") which increased assets by $11 billion, as well as a $12 billion increase in goodwill related to acquisition activity during the year.

⁽⁸⁾

Income from continuing operations for the year ended September 30, 2000 includes a net charge of $176 million for restructuring and other charges, and charges of $99 million for the impairment of long-lived assets. Income from continuing operations for the year ended September 30, 2000 also includes a pretax gain of $1,760 million related to the sale by a subsidiary of its common shares. Net income also includes $46 million of income, net of income taxes, from discontinued operations for the year ended September 30, 2000.

⁽⁹⁾

Income from continuing operations includes goodwill amortization of $532 million and $338 million for the years ended September 30, 2001 and 2000, respectively. Effective October 1, 2001, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," under which goodwill is no longer amortized.

⁽¹⁰⁾

Tyco has paid a quarterly cash dividend of $0.0125 per common share for all periods presented. On December 9, 2004, the Board of Directors approved an increase in the quarterly dividend on our common shares from $0.0125 to $0.10 per share. The payment of dividends by Tyco in the future will depend on business conditions, Tyco's financial condition and earnings and other factors.

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion and analysis of our financial condition and results of operations should be read together with the Selected Financial Data and our Consolidated Financial Statements and the related notes included elsewhere in this Annual Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those under the headings "Risk Factors" and "Forward-Looking Information."

Introduction

        The Consolidated Financial Statements include the consolidated accounts of Tyco International Ltd., a company organized under the laws of Bermuda, and its subsidiaries (Tyco and all its subsidiaries, hereinafter collectively referred to as "we," the "Company" or "Tyco") and have been prepared in United States dollars, and in accordance with Generally Accepted Accounting Principles in the United States ("GAAP").

        The Company operates in the following business segments:

•

Fire and Security designs, manufactures, installs, monitors and services electronic security and fire protection systems.



•

Electronics designs, manufactures and distributes electrical and electronic components.



•

Healthcare designs, manufactures and distributes medical devices and supplies, imaging agents, pharmaceuticals and adult incontinence and infant care products.



•

Engineered Products and Services designs, manufactures, distributes and services engineered products, including industrial valves and controls, as well as steel tubular goods, and provides environmental and other industrial consulting services.



•

Plastics and Adhesives designs, manufactures and distributes plastic products, adhesives and films.

        Unless otherwise indicated, references in this Annual Report to 2004, 2003 and 2002 are to Tyco's fiscal year ended September 30, 2004, 2003 and 2002, respectively.

Overview

        Our business strategy focuses on enhancing internal growth and operational efficiency for existing Tyco businesses. We achieve this goal primarily through new product innovation, increased market share, increasing the service and repair components of our existing businesses and continued geographic expansion. We have implemented and continue to implement additional Six Sigma initiatives across our business segments.

        The Company has engaged in a series of restructuring programs through which we have made our operations more efficient by exiting certain non-core businesses or business lines, or streamlining general operations. The restructuring program announced in November 2003, designed to improve our cost structure primarily in Fire and Security, but also in Plastics and Adhesives and Engineered Products and Services, was substantially completed in 2004. The impact of these restructuring programs on the operations of the Company are discussed in "Operating Results" and "Segment Results." Additionally, the details related to the Company's divestiture program and the related discontinued operations are discussed in "Divestitures and Discontinued Operations."

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        References to Tyco are to the Company's continuing operations and prior year amounts have been reclassified to exclude the results of discontinued operations. During 2004, Tyco's Precision Interconnect business was transferred from Healthcare to Electronics. During 2003, the Company finalized its plan to sell the Tyco Global Network ("TGN") and, as a result, reorganized its reporting structure such that the results of the TGN business held for sale are presented within Corporate and Other. Also during 2003, the Company changed its internal reporting structure such that the operations of Tyco's plastics and adhesives businesses (previously reported within Healthcare and Specialty Products) now comprise the Plastics and Adhesives reportable segment. The Company has conformed its segment reporting accordingly and has reclassified comparative prior period information to reflect these changes.

Operating Results

        The following table details net revenue and earnings for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

	2004			2003			2002
Revenue from product sales	$	32,079		$	28,844		$	28,187
Service revenue		8,074			7,143			6,637
Net revenue	$	40,153		$	35,987		$	34,824
Operating income (loss)	$	5,317		$	3,059		$	(1,472	)
Interest income		91			107			117
Interest expense		(963	)		(1,148	)		(1,076	)
Other expense, net		(286	)		(223	)		(217	)
Income (loss) from continuing operations before income taxes and minority interest		4,159			1,795			(2,648	)
Income taxes		(1,140	)		(757	)		(202	)
Minority interest		(14	)		(3	)		(1	)
Income (loss) from continuing operations		3,005			1,035			(2,851	)
(Loss) income from discontinued operations, net of income taxes		(3	)		20			(6,270	)
Loss on sale of discontinued operations, net of income taxes		(123	)		—			(59	)
Income (loss) before cumulative effect of accounting change		2,879			1,055			(9,180	)
Cumulative effect of accounting change, net of income taxes		—			(75	)		—
Net income (loss)	$	2,879		$	980		$	(9,180	)

        The Company made significant progress in 2004 towards meeting our strategic objectives. As described more fully in Segment Results below, over the course of 2004 we experienced solid revenue growth in Electronics, Healthcare, Engineered Products and Services, and to a lesser extent Fire and Security. We also expanded operating margins due in large part to the momentum and strong results from our operational intensity programs. In addition to the strong operating performance, favorable foreign currency exchange rates contributed positively to net revenue and operating income growth in 2004, as well as in 2003.

        Net revenue increased 11.6% during 2004 to $40.2 billion from $36.0 billion in 2003. Net revenue increased 3.3% during 2003 as compared to $34.8 billion in 2002. Tyco had income from continuing operations of $3,005 million in 2004, compared to $1,035 million in 2003, and a loss from continuing operations of $2,851 million in 2002.

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        The effect of changes in foreign exchange rates for 2004 compared to 2003 was an increase in net revenue and operating income of $1,685 million and $230 million, respectively. The effect of changes in foreign exchange rates for 2003 compared to 2002 was an increase in net revenue and operating income of $1,508 million and $191 million, respectively. The 2004 and 2003 impact of foreign currency was primarily due to the strengthening of the Euro against the U.S. Dollar.

        Income from continuing operations for 2004 included net charges totaling $755 million ($564 million after tax), consisting of the following: (i) charges for the impairment of long-lived assets of $99 million, of which $34 million is attributable to machinery and equipment impairments at Fire and Security; (ii) net restructuring and other charges of $256 million, of which charges of $7 million are included in cost of sales; (iii) net losses and impairments on divestitures totaling $116 million; (iv) a loss of $284 million associated with the retirement of debt; and (v) a $5 million write-down of investments.

        Income from continuing operations for 2003 included net charges totaling $1,832 million ($1,566 million after-tax) consisting of the following: (i) charges for the impairment of long-lived assets of $815 million; (ii) charges recorded for changes in estimates of $389 million which arose from the Company's intensified internal audits and detailed controls and operating reviews (includes net restructuring credits of $72 million, of which credits of $12 million are included in costs of sales, charges for the impairment of long-lived assets of $10 million, charges of $243 million included in selling, general and administrative expenses, charges of $123 million included in cost of sales, a charge of $76 million relating to the write-down of investments and other expense of $9 million, both of which are included in other (expenses) income, net); (iii) charges for the impairment of goodwill of $278 million; (iv) other net loss of $128 million related to the retirement of debt; (v) other charges of $148 million, of which $34 million is included in cost of sales related primarily to product warranty reserves and the dismantlement of customers' ADT security systems, and $114 million is included in selling, general and administrative expenses related primarily to uncollectible accounts receivable, internal investigation fees, as well as severance and facility closures, slightly offset by a credit for changes in estimates of charges recorded in prior periods; (vi) a charge of $91 million for a retroactive, incremental premium on prior period directors and officers insurance included in selling, general and administrative expenses; (vii) a charge of $12 million relating to the write-down of investments; (viii) other interest expense of $2 million; (ix) other interest income of $19 million; and (x) net restructuring credits of $12 million, of which charges of $2 million are included in cost of sales.

        Loss from continuing operations for 2002 included a net charge totaling $6,759 million ($6,091 million after-tax), consisting of the following: (i) goodwill impairment charge of $1,344 million relating to continuing operations; (ii) charges for the impairment of long-lived assets of $3,310 million primarily related to the write-down of the TGN; (iii) net restructuring and other charges of $1,872 million, of which $636 million is included in cost of sales and $115 million related to a bad debt provision is included in selling, general and administrative expenses; (iv) a write-off of purchased in-process research and development of $18 million; (v) a loss on the write-off of investments of $271 million; (vi) a gain on divestiture of $24 million; and (vii) gain from the retirement of debt of $30 million.

Segment Results

        The segment discussions that follow describe the significant factors contributing to the changes in results for each segment. During 2004, divestitures impacted certain of our segments as we implemented a divestiture program in early 2004. During 2003 and 2002, acquisitions were a significant element of our growth strategy and, therefore, were a significant component of our results. See further details in "Divestitures and Discontinued Operations" and "Acquisitions" below.

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Fire and Security

        The following table sets forth net revenue and operating income and margin for Fire and Security for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

	2004			2003			2002
Revenue from product sales	$	5,343		$	4,893		$	4,733
Service revenue		6,104			5,939			5,472
Net revenue	$	11,447		$	10,832		$	10,205
Operating income	$	899		$	342		$	900
Operating margin		7.9	%		3.2	%		8.8	%

        Net revenue for Fire and Security increased 5.7% in 2004 as compared to 2003, including a 9.2% increase in product revenue and a 2.8% increase in service revenue. Revenue from product sales include sales and installation of security, fire protection and other systems. The increase in net revenue was primarily due to favorable currency exchange rates ($526 million) slightly offset by the effects of divestitures ($82 million). To a lesser extent, the increase in net revenue was due to stronger sales to retailers within worldwide security and higher sales volume of breathing systems and video and access control products at Tyco Safety Products. This increase was partially offset by weakness in the worldwide fire service business and Continental Europe Security.

        Operating income and margin increased significantly in 2004 as compared to 2003 due partially to total charges of $512 million which were recorded during 2003, discussed below. Additionally, the increase in operating income and margin was due to improvements within worldwide security related primarily to the combined impact of a stronger retailer market environment and cost reductions. Also contributing to the increase, to a lesser extent, were improvements within Continental Europe Security as a result of cost saving initiatives and a changing business model and Tyco Safety Products due primarily to increased volumes. The cost savings partly reflect the benefits of the restructuring activities described below. Operating income for 2004 also includes charges totaling $264 million, consisting primarily of restructuring ($175 million, of which $4 million is included in cost of sales), impairment ($34 million) and divestiture ($55 million) charges, substantially all of which are associated with the comprehensive cost reduction measures that began during 2003.

        Attrition rates for customers in our global electronic security services business decreased to an average of 15.1% on a trailing twelve-month basis for 2004, as compared to 15.9% for 2003.

        Net revenue for Fire and Security increased 6.1% in 2003 as compared to 2002, including a 3.4% increase in product revenue and an 8.5% increase in service revenue. The increase in net revenue was due to favorable changes in foreign currency exchange rates ($459 million) and 2002 acquisitions ($214 million calculated in the manner described below in "Acquisitions"). Acquisitions included SBC/Smith Alarm Systems, DSC Group ("DSC") and Sensormatic Electronics Corporation ("Sensormatic") in early 2002, and all other acquisitions with a purchase price of $10 million or more. In addition, an increase in net revenues due to customer contracts purchased through the ADT dealer program ($371 million) and generated through our internal sales force offset a decline in net revenue due to increased attrition rates in worldwide security. The overall increase was also partially offset by a decline in net revenue at the worldwide fire protection business due to softness in the commercial construction market.

        Operating income and margin decreased significantly in 2003 as compared to 2002 due to charges totaling $512 million recorded during 2003. Included within the $512 million are charges of $266 million (includes charges of $128 million primarily related to adjustments to liabilities such as workers' compensation, professional fees, and environmental exposure, a charge of $98 million primarily due to adjusting allowances for doubtful accounts and slow and non-moving inventory, as well

31

as a write-off of subscriber systems, charges of $34 million for other adjustments primarily related to deferred commissions, and charges of $6 million related to reconciling items in the current period) recorded in connection with the Company's intensified internal audits, detailed controls and operating reviews performed during the year. Also included within the $512 million are impairment charges of $143 million primarily related to the impairment of intangible assets associated with the ADT dealer program mostly as a result of increased attrition rates (discussed below), and to the impairment of property, plant and equipment of subscriber systems and other fixed assets; net restructuring and other charges of $10 million, of which charges of $4 million are included in cost of sales and $3 million is for the write-off of non-current assets, related to streamlining the business; and other charges of $93 million, of which $34 million is included in cost of sales and $59 million is included in selling, general and administrative expenses, primarily related to uncollectible receivables, product warranty and the dismantlement of customers' ADT security systems. Included within the $143 million impairment charge and the $10 million net restructuring charge is a charge of $10 million and a credit of $2 million, respectively, also related to changes in estimates recorded during the quarter ended March 31, 2003. The decrease in operating income and margins was also due to increased depreciation and amortization expense in the security business due to growth in the subscriber asset and dealer asset base as well as the impact of the acquisitions of Sensormatic and DSC in 2002; decline in operating income in the Continental European Security business; and a weaker worldwide fire and contracting environment.

        Attrition rates for customers in our global electronic security services business averaged 15.9% on a trailing twelve-month basis for 2003, as compared to 13.2% for 2002. This increase relates to attrition in customer accounts acquired through our worldwide dealer program, as well as internally generated commercial customer accounts in continental Europe and internally generated residential customer accounts in the United States (both of which were partly driven by increased management and control of delinquent accounts). For those account pools experiencing increased attrition, prior lifing studies were re-examined. The Company concluded that existing amortization methods and asset lives continue to be appropriate given the observed actual attrition data for these pools.

        Operating income and margin in 2002 include a net restructuring and other charge of $95 million. The net $95 million charge includes charges of $113 million, of which inventory write-downs of $19 million are reflected in cost of sales. These charges are primarily related to severance and facility exit costs associated with streamlining the business, slightly offset by a credit of $18 million relating to current and prior years' restructuring charges. Also included within operating income in 2002 is a charge of $18 million for the write-off of purchased in-process research and development associated with the acquisitions of Sensormatic and DSC and a charge of $115 million for the impairment of property, plant and equipment resulting primarily from the termination of a software development project and, to a lesser extent, from the curtailment, and in certain markets, the termination of the ADT dealer program in certain non-U.S. markets.

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Electronics

        The following table sets forth net revenue and operating income and margin for Electronics for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

	2004			2003			2002
Revenue from product sales	$	11,372		$	10,052		$	10,151
Service revenue		450			440			441
Net revenue	$	11,822		$	10,492		$	10,592
Operating income	$	1,749		$	1,241		$	(1,142	)
Operating margin		14.8	%		11.8	%		(10.8	)%

        Net revenue for Electronics increased 12.7% in 2004 as compared to 2003, including a 13.1% increase in product revenue and a 2.3% increase in service revenue. The increase in net revenue was primarily a result of growth in our existing businesses, specifically, the automotive, computer, consumer electronics, communications and industrial and commercial markets. However, we continue to experience a decrease in sales of Power Systems products in North America and in our Electrical Contracting Services, which was divested in September 2004. To a lesser extent, the increase in net revenue resulted from favorable changes in foreign currency exchange rates ($560 million).

        The 40.9% increase in operating income and the 3.0% increase in margin in 2004 as compared to 2003 were primarily due to the revenue growth discussed above, cost saving initiatives that were executed in 2003, the positive impact of foreign currency ($90 million) and fewer charges recorded in 2004 as compared to 2003. These increases in operating income were partially offset by an 80 basis point impact of increased metal prices for copper and gold. Operating income for 2004 includes net restructuring, divestiture and impairment charges totaling $22 million. These net charges include a $52 million charge related to the divestiture of the Electrical Contracting Services business, partially offset by $33 million of net restructuring credits related to changes in estimates of severance, facility exit costs, distributor and supplier cancellation fees recorded in prior periods and the impact of the sale of assets that were impaired in prior years for amounts greater than originally anticipated. These net charges also include a $3 million charge related to the impairment of property, plant and equipment.

        Net revenue for Electronics decreased slightly in 2003 as compared to 2002. Net revenue at the electronic components group increased $442 million, or 4.5% due primarily to the favorable impact of foreign currency exchange rates. Net revenue for the submarine telecommunications business declined $542 million, or 79.9%, due to completion of third-party undersea fiber optic system installations in 2002. Overall, the decrease in net revenue for the submarine telecommunications business more than offset the increase in total net revenue due to favorable changes in foreign currency exchange rates of $524 million, and $69 million (calculated in the manner described below in "Acquisitions") due to the acquisitions of Transpower Technologies in November 2001, Communications Instruments, Inc. in January 2002, and all other acquisitions with a purchase price of $10 million or more.

        The increase in operating income and margin in 2003 as compared to 2002 was due to operating losses in the prior year, primarily as a result of charges totaling $1,965 million (discussed below) that were recorded in 2002. Operating income and margin for 2003 include net charges totaling $236 million. The $236 million consists primarily of charges for the impairment of goodwill of $278 million in Power Systems, Electrical Contracting Services and the Printed Circuit Group, restructuring credits of $72 million, of which $20 million is included in cost of sales, related primarily to changes in estimates of severance and facility exit costs recorded in prior years and charges for the impairment of long-lived assets of $1 million. The net restructuring credit of $72 million includes $55 million of credits, which were changes in estimates recorded in connection with the Company's intensified internal audits and detailed controls and operating reviews performed during 2003. Also

33

included within the $236 million are charges of $14 million related to adjusting asset reserves, $6 million related to the adjustments to accrual balances, $9 million of reconciliation and other accounting adjustments, which were also recorded in connection with the Company's intensified internal audits and detailed controls and operating reviews performed during 2003.

        The operating loss in 2002 was primarily due to restructuring and other charges as well as the impairment of long lived assets and goodwill in addition to the decrease in revenue. In the electronic components business, the overall decrease in demand resulted in much lower manufacturing volumes across all business units, which increased per unit costs. In the Submarine Telecommunications business, margin was impacted significantly by a significant reduction in third party system builds.

        Operating loss and margin for 2002 include net restructuring and other charges of $1,115 million. The $1,115 million net charge includes charges totaling $1,141 million, of which inventory reserves of $609 million are included in cost of sales. These charges primarily relate to initiatives taken to reduce fixed costs, due to the significant downturn in the telecommunications business and certain electronics end markets, including facility closures, headcount reductions, inventory reserves and purchase commitment cancellations. These charges were slightly offset by a restructuring credit of $26 million primarily relating to a revision in estimates of current and prior years' severance and facilities charges. Total inventory charges of $833 million include $609 million of inventory write-downs and $212 million of supplier contract termination fees. In 2002, $20 million was originally included in the inventory written down and was recorded as a restructuring credit to cost of sales in 2003. Also included within operating loss and margins for 2002 are charges of $569 million for the impairment of long lived assets, and goodwill impairment charges of $281 million related to Tyco Submarine Telecommunications.

Healthcare

        The following table sets forth net revenue and operating income and margin for Healthcare for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

	2004			2003			2002
Revenue from product sales	$	9,040		$	8,344		$	7,693
Service revenue		70			76			71
Net revenue	$	9,110		$	8,420		$	7,764
Operating income	$	2,365		$	2,104		$	1,833
Operating margin		26.0	%		25.0	%		23.6	%

        Net revenue for Healthcare increased 8.2% in 2004 as compared to 2003. The increase in net revenue resulted primarily from growth in our existing businesses and favorable foreign currency exchange rates ($292 million). Growth in Healthcare's underlying businesses was primarily a result of increased net revenue within Medical Devices & Supplies, and to a lesser extent, at Pharmaceuticals. The increase at Medical Devices & Supplies was largely driven by higher sales volume within our International division, particularly in Europe, due to benefits realized from the sales force investment, back order recovery, growth in Spain and Italy and the absence of an unfavorable $47 million contractual adjustment recorded in 2003. Also contributing to the increase in Medical Devices and Supplies were higher sales within the Medical division resulting primarily from new SharpSafety product launches and gain in market share within the wound care market.

        The 12.4% increase in operating income in 2004 as compared to 2003 was due primarily to the favorable margin impact of the increased sales discussed above, favorable foreign currency exchange rates and a continued focus on maximizing operating efficiencies. Operating income was adversely impacted by a $29 million increase in legal liabilities for an ongoing patent infringement suit, and a $59 million increase in research and development costs. Additionally, 2004 operating income includes

34

net restructuring, divestiture and impairment charges of $18 million, composed of: (i) restructuring charges of $13 million related to the closure of various facilities offset by a credit of $2 million due to costs being less than anticipated; (ii) a $4 million divestiture charge resulting from a loss on the sale of a business and (iii) $3 million of impairment charges related to the closure of various facilities.

        Net revenue for Healthcare increased 8.4% in 2003 as compared to 2002, including an 8.5% increase in product revenue and a 7.0% increase in service revenue. The increase in net revenue resulted primarily from growth in our existing businesses and favorable foreign currency exchange rates and, to a lesser extent, acquisitions, net of divestitures. Growth in our existing businesses was due to the following: increases in the Surgical division concurrent with the award of a major contract and continued organic growth within certain surgical stapling lines; increases in the Medical division resulting from the award of a significant wound care contract, coupled with the exit of a major competitor from the traditional wound care business; new product launches and higher demand in the ultrasound market; increases in Pharmaceuticals and Imaging due to higher volumes and increased market share; and, strong sales within the Respiratory division. These sales increases were partially offset by a decrease in the diaper product segment of the Retail business largely resulting from the adverse impact of the industry-wide down-count issues, and a decline in the International division due to lower sales in continental Europe and Latin America. The increase in net revenue also resulted from favorable changes in foreign exchange rates ($268 million) and incremental revenue generated from the acquisition of Paragon Trade Brands ("Paragon") in January 2002 ($124 million calculated in the manner described below in "Acquisitions"), slightly offset by a decline in revenue ($48 million) related to the divestiture of Surgical Dynamics, Inc. in July 2002.

        The 14.8% increase in operating income and increase in margin in 2003 as compared to 2002 were due primarily to favorable margin impact as a result of higher sales and favorable manufacturing variances as a result of increased production volumes, a shift to a more favorable product mix, and cost savings as a result of the closure of certain Paragon facilities, back office consolidations and our continued focus on optimizing operating expenses. Slightly offsetting the effect of those items were increased legal fees, insurance and pension expense, and higher sales and marketing expense as a result of program development aimed at supporting organic growth initiatives. Also contributing to the increase in operating income and margins were favorable fluctuations in foreign currency exchange rates and the impact of acquisitions and divestitures. During 2003, we recorded net credits totaling $2 million, including restructuring credits of $8 million due to actual costs being less than anticipated, and a credit of $7 million related to an insurance reimbursement for certain legal fees associated with product liability cases. These credits were largely offset by charges of $12 million related to asset reserves for inventory and charges of $1 million for adjustments to accrual balances related to workers' compensation, which were changes in estimates recorded in connection with the Company's intensified internal audits, detailed controls and operating reviews and as a result of applying management's judgments and estimates.

        Operating income and margin for 2002 reflect net restructuring and other charges of $45 million. The $45 million net charge includes charges of $49 million, of which inventory write-downs of $1 million are included in cost of sales. These charges primarily relate to severance associated with the consolidation of operations and facility related costs due to exiting certain business lines, and are partially offset by a credit of $4 million relating to current and prior years' restructuring charges. Operating income and margin for 2002 also include a charge for the impairment of long-lived assets of $2 million.

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Engineered Products and Services

        The following table sets forth net revenue and operating income and margin for Engineered Products and Services for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

	2004			2003			2002
Revenue from product sales	$	4,582		$	3,824		$	3,888
Service revenue		1,425			674			645
Net revenue	$	6,007		$	4,498		$	4,533
Operating income	$	620		$	362		$	251
Operating margin		10.3	%		8.0	%		5.5	%

        Net revenue for Engineered Products and Services increased $1,509 million or 33.5% in 2004 as compared to 2003, of which $739 million, or 16.4%, represents a change in how we classify certain sub-contract and other costs that are paid by Infrastructure Services and re-billed to their customers. These costs have historically been treated as "pass through" and were therefore not included in reported revenue and cost of revenue of Infrastructure Services. For the year ended September 30, 2004, the Company began reflecting these sub-contract costs in both revenue and cost of revenue of Infrastructure Services. The Company has not adjusted revenue or cost of revenue for the years ended September 30, 2003 and 2002 as such change was not material. Further, such adjustment would have no impact on previously reported operating income, net income (loss) or cash flow.

        The remaining increase in net revenue resulted primarily from increased demand and higher selling prices at Electrical & Metal Products and at Tyco Fire & Building Products and favorable foreign currency exchange rates in all businesses ($298 million). Further contributing to the increase, although to a much lesser extent, were improved business conditions at Infrastructure Services due primarily to an improved construction market and continued market share growth. Sales remained flat at Flow Control as the impact of lower levels of non-residential construction and industrial capital spending, primarily in North America, were offset by improved activity in other end markets and geographic regions.

        The 71.3% increase in operating income and the 2.3% increase in margin in 2004 as compared to 2003 were due primarily to increased net revenue discussed above, the impact of cost reduction programs initiated in prior periods and the positive impact of foreign currency ($31 million). These favorable increases were partly offset by the impact of higher raw material costs. Additionally, operating income includes net restructuring, impairment and divestiture charges of $62 million in 2004 compared to $56 million (discussed below) in 2003. Included in the $62 million charge is $53 million of restructuring and $4 million of impairment charges related to the consolidation of manufacturing, distribution and office locations and activities at Flow Control and Infrastructure Services. The remaining $5 million divestiture charge primarily relates to an impairment of goodwill related to the sale of a business. The revenue reclassification at Infrastructure Services discussed above had no impact on operating income for 2004; however, this adjustment lowered 2004 operating margin by 1.5 percentage points.

        Net revenue for Engineered Products and Services slightly decreased in 2003 as compared to 2002, including a 1.6% decrease in product revenue partially offset by a 4.5% increase in service revenue. Net revenue decreased year over year, as the increase in net revenue due to favorable changes in foreign currency exchange rates ($219 million) and the effect of acquisitions ($41 million calculated in a manner described below in "Acquisitions") was more than offset by weak conditions in major markets at Flow Control and Electrical & Metal Products, most notably in non-residential construction. Also contributing to the overall decrease were lower levels of capital spending and increased pricing pressure, resulting in lower selling prices. The $41 million effect from acquisitions included Century

36

Tube Corporation in October 2001, Water & Power Technologies in November 2001, Clean Air Systems in February 2002 and all other acquisitions with a purchase price of $10 million or more.

        The 44.2% increase in operating income and the increase in margin in 2003 compared to 2002 was due to lower than usual operating income in the prior year period as a result of recording charges of $377 million (discussed below). During 2003, we recorded charges totaling $56 million, which includes charges of $32 million related to changes in estimates recorded in connection with the Company's intensified internal audits, detailed controls and operating reviews, and as a result of applying management's judgments and estimates (including $19 million related to adjustments to workers' compensation and $13 million associated with asset reserves). These charges also include charges of $8 million, of which a $6 million charge is included in cost of sales, for 2003 restructuring plans partially offset by changes in estimates due to actual costs being less than originally anticipated, charges for the impairment of long-lived assets of $2 million relating to manufacturing and distribution consolidation at Flow Control and cost reduction projects, and other costs of $14 million included within selling, general and administrative expenses primarily related to the reorganization and consolidation of a manufacturing facility and certain business offices. Operating income and margin were also negatively impacted by the lower sales discussed above, competitive conditions in major markets for valves and controls, thermal controls, and electrical and metal products, and increased raw material costs, primarily steel.

        Operating income and margin for 2002 reflect $377 million of restructuring and other charges consisting of $48 million, of which inventory write-downs of $6 million are included in cost of sales, primarily related to severance and facility exit costs associated with streamlining the business. Also included are charges of $10 million for the impairment of property, plant and equipment associated with the closure of facilities, and goodwill impairment charges of $319 million relating to Tyco Infrastructure Services.

Plastics and Adhesives

        The following table sets forth net revenue and operating income and margin for Plastics and Adhesives for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

	2004			2003			2002
Revenue from product sales	$	1,742		$	1,731		$	1,722
Operating income	$	69		$	171		$	196
Operating margin		4.0	%		9.9	%		11.4	%

        Net revenue increased slightly in 2004 as compared to 2003 primarily due to an increase in price ($44 million) and volume ($4 million) in Plastics. Additionally, foreign currency had a positive impact of $9 million on net revenue, and increased volume in Ludlow Coated Products ($5 million) from its building products and flexible packaging business also contributed to the overall increase. These increases were largely offset by softness in A&E Products ($49 million), particularly in the Americas Hangers business, in Asia and in the Catering business and a slight decline in Adhesives sales volume in the Corrosion Protection business.

        The significant decreases in operating income and operating margin in 2004 as compared to 2003 were primarily due to impairment ($47 million) and restructuring charges ($44 million) incurred during 2004 totaling $91 million associated with the closure of various facilities. The decreases in net revenue discussed above and margin declines at A&E Products due to lower volumes and pricing pressure also contributed to the decrease in operating income and margin. Operating income and margin for 2003 includes a net credit of $1 million discussed below.

        Net revenue at Tyco Plastics and Adhesives increased slightly in 2003 as compared to 2002 due to the effect of favorable changes in foreign currency exchange rates ($38 million) and acquisitions

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($21 million calculated in the manner described below in "Acquisitions"), which included LINQ Industrial Fabrics, Inc. in December 2001 and all other acquisitions with a purchase price of $10 million or more. Sales increases were achieved by higher selling prices as a result of higher raw material costs, increased sales volume of plastic sheeting and duct tape products as a result of the heightened level of security related to the potential likelihood of terrorist attacks, and a strong residential construction market for Ludlow Coated Products. These increases were more than offset by increased competition and decreases in our Corrosion Protection business, which had been negatively impacted by a slow down in the oil and gas pipeline construction markets created by uncertainty in the Middle East and Venezuela, and a decline in hanger sales due to weak demand in the retail garment industry.

        The significant decrease in operating income and decrease in operating margin in 2003 as compared to 2002 were primarily due to increased raw material costs (primarily polyethylene) and increased pricing competition driven by excess production capacity and an increase in lower priced imported goods. During 2003, Tyco Plastics and Adhesives recorded net credits totaling $1 million. These credits include charges of $6 million related to changes in estimates recorded in connection with the Company's intensified internal audits, detailed controls and operating reviews and as a result of applying management's judgments and estimates (including $3 million for adjustments to accrual balances, and $3 million related to asset reserves for inventory), restructuring credits of $1 million due to costs being less than anticipated and a credit of $6 million related to the settlement of a lawsuit.

        Operating income and margin for 2002 reflect net restructuring and other charges of $10 million, of which inventory write-downs of $1 million are included in cost of sales. These charges primarily relate to severance associated with the consolidation of operations and facility related costs due to exiting certain business lines. Operating income and margins for 2002 also include a charge for the write-off of long-lived assets of $3 million primarily related to the impairment of long-lived assets.

Corporate and Other

        Corporate net revenue of $25 million, $14 million and $8 million in 2004, 2003 and 2002, respectively, relates to the TGN business, which is classified as held for sale. Corporate expense was $385 million, $1,161 million and $3,510 million in 2004, 2003 and 2002, respectively, which includes operating losses of $73 million, $760 million and $3,090 million in 2004, 2003 and 2002, respectively, related to the TGN business held for sale.

        Corporate expense for 2004 includes net charges of $14 million, which consists of charges for the impairment of long-lived assets of $8 million and net restructuring charges of $6 million primarily attributable to severance related to the relocation of the corporate headquarters.

        Corporate expense for 2003 includes charges totaling $824 million. Included within the $824 million is a charge of $91 million for an incremental increase in directors and officers insurance and charges of $39 million related to internal investigation fees. Also included is a charge of $20 million primarily related to severance and benefits for corporate employees and a restructuring credit of $11 million due to actual costs being less than anticipated, both of which were changes in estimates recorded in connection with the Company's intensified internal audits, detailed controls and operating reviews and as a result of applying management's judgments and estimates. Also included within the $824 million are net restructuring credits of $10 million, other net charges of $16 million included in selling, general and administrative expenses, and charges for the impairment of long-lived assets of $679 million primarily related to the TGN business held for sale and, to a lesser extent, the closure and relocation of corporate offices and related severance and benefits.

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        Corporate expense in 2002 includes net restructuring, impairment and other charges of $3,914 million including $2,582 million related to the impairment of the TGN, $29 million related to the impairment of certain properties associated with the consolidation of corporate headquarters, $744 million related to goodwill impairment within the TGN business held for sale, and net restructuring and other charges of $559 million primarily related to charges within the TGN business held for sale and, to a lesser extent, the write-off of investment banking fees and other deal costs associated with the terminated breakup plan and certain acquisitions that were not completed, costs incurred for the internal investigation, and severance.

        The significant restructuring charges recorded in 2002 were primarily related to the restructuring of the TGN business held for sale to address the significant overcapacity in the market and resulting lack of demand for new system construction. In the fourth quarter of 2002, management decided to focus the business for the foreseeable future on maintenance revenue and capacity sales on the TGN, to discontinue future additions to the TGN, and to limit construction activities to small projects that were cash flow positive with at least breakeven earnings. As a result of this strategy, management devised a plan to significantly downsize the manufacturing footprint, decrease project management staffing, reduce the research and development function and minimize staffing and expense in all other administrative areas of the business to decrease cash outflows and losses to the maximum extent possible. This plan was carefully crafted to ensure that both the technical and construction competencies of the business would be preserved in the event industry conditions improve.

Results by Geographic Area

        Net revenue by geographic area for the years ended September 30, 2004, 2003 and 2002 is as follows ($ in millions):

		2004		2003		2002
Net revenue:
United States		$	21,156	$	19,822	$	20,292
Other Americas			2,169		1,844		2,007
Europe			11,018		9,366		8,026
Asia-Pacific			5,810		4,955		4,499
	Net revenue(1)	$	40,153	$	35,987	$	34,824

⁽¹⁾

Revenue from external customers are attributed to individual countries based on the reporting entity that records the transaction.

Interest Income and Expense

        Interest income was $91 million in 2004, as compared to $107 million and $117 million in 2003 and 2002, respectively.

        Interest expense was $963 million in 2004, as compared to $1,148 million in 2003 and $1,076 million in 2002. The decrease in interest expense in 2004 as compared to 2003 is primarily the result of a lower average debt balance in 2004 and the favorable impact of interest rate swap agreements executed during the year. The increase in interest expense in 2003 over 2002 is primarily the result of the benefit from the cancellation of certain swaps in 2002 and a decrease in capitalized interest due to the completion of the TGN, partially offset by a lower average outstanding debt balance during 2003. The weighted-average rates of interest on total debt outstanding during 2004, 2003 and 2002 were 5.4%, 4.9% and 4.5%, respectively. The weighted-average interest rate during 2004 increased due to the retirement of lower interest rate debt.

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Other Expense, Net

        During 2004, net other expense of $286 million consisted primarily of a $284 million loss related to the repurchase of a portion of its outstanding convertible debt prior to its scheduled maturity. See Note 15 to the Consolidated Financial Statements for details regarding debt repurchases.

        During 2003, net other expense of $223 million consisted primarily of a net loss on the retirement of debt of $128 million. See Note 15 to the Consolidated Financial Statements for details regarding debt repurchases. Additionally, net other expense included an $87 million loss relating to the write-down of various investments when it became evident that the declines in the fair value of the investments were other than temporary, predominately due to the continuing depressed economic conditions, specifically within the telecommunications industry.

        During 2002, net other expense of $217 million consisted primarily of a $271 million loss on various investments, mainly related to its investments in FLAG Telecom Holdings Ltd. ("FLAG") when it became evident that the declines in the fair value of FLAG and other investments were other than temporary. This loss was partially offset by a gain of $30 million related to the retirement of debt and a net gain on divestiture of $24 million (see "Divestitures and Discontinued Operations" below).

Income Taxes

        Our effective income tax rate was 27.4%, 42.2% and (7.6)% for 2004, 2003 and 2002, respectively. The decline in the effective rate from 2003 to 2004 is principally the result of increased profitability in operations primarily in jurisdictions with lower tax rates and a decrease in nondeductible charges. The change in the effective tax rate from 2002 to 2003 is primarily the result of a decrease in impairment and other charges which did not provide a tax benefit and a decrease in other non-deductible charges.

        During 2004, the Company made substantial changes to its tax reporting and compliance processes, including preparation of amended U.S. federal income tax returns, hiring and training of additional tax personnel and the completion of a comprehensive review, analysis and reconciliation of its deferred tax assets and liabilities as of September 30, 2003 and September 30, 2004. The presentation of deferred tax assets and liabilities as of September 30, 2003 has been reclassified for comparability purposes as a result of this comprehensive deferred tax analysis.

        The valuation allowance for deferred tax assets of $1,992 million and $1,879 million at September 30, 2004 and 2003, respectively, relates principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions. We believe that we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets on our Consolidated Balance Sheets. The valuation allowance was calculated in accordance with the provisions of SFAS No. 109 which requires a valuation allowance be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized.

        The Company and its subsidiaries' income tax returns are periodically examined by various tax authorities. The Company is currently under audit by the Internal Revenue Service ("IRS") for the years 1997 to 2000. In connection with such examinations, certain tax authorities, including the IRS, have raised issues and proposed tax deficiencies. The Company is reviewing the issues raised by the tax authorities and is contesting certain proposed tax deficiencies. Amounts related to these tax deficiencies and other tax contingencies that management has assessed as probable and estimable have been recorded through the income tax provision.

        The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due.

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These tax liabilities are reflected net of related tax loss carryforwards. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. Further, management has reviewed with tax counsel the issues raised by these taxing authorities and the adequacy of these recorded amounts. Substantially all of these potential tax liabilities are recorded in other liabilities on the Consolidated Balance Sheets as payment is not expected within one year.

        In connection with the IRS audits for the years 1997-2000, the Company prepared proposed amendments to these prior period U.S. federal income tax returns resulting in a reduction in the taxable income previously reported. The IRS is currently reviewing the proposed amendments. The Company has not recorded the impact of the proposed amendments, pending the completion of the IRS review. The proposed amendments, if accepted, will result in receipt of refunds or credits and a corresponding reduction to the deferred tax assets and liabilities. The Company may prepare proposed amendments to prior period U.S. federal income tax returns for additional periods. The proposed amendments are not expected to have a material adverse impact on our financial condition, results of operations or cash flows.

        Except for earnings that are currently distributed, no additional provision has been made for U.S. or non-U.S. income taxes on the undistributed earnings of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to investments in subsidiaries, as such earnings are expected to be permanently reinvested, the investments are essentially permanent in duration, or the Company has concluded that no additional tax liability will arise as a result of distribution of such earnings. A liability could arise if amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in subsidiaries.

Divestitures and Discontinued Operations

        During 2003, we conducted a comprehensive review of our core businesses, and as a result, implemented a divestiture program in early 2004. This strategy is intended to sharpen our focus on core businesses, simplify operations and improve cost structure. This divestiture program is designed to increase the focus on our core operations by exiting certain operations that do not meet our criteria for strategic fit or financial returns. In November 2003, we estimated that the potential proceeds excluding the proceeds from the sale of the TGN could be at least $400 million once the program is completed. Cumulative proceeds through the date of this filing are approximately $412 million. As part of this program, we planned to sell the TGN, our undersea fiber optic telecommunications network. The market for the TGN is challenged by significant overcapacity and severe pricing pressure and the industry is in need of consolidation. However, we plan to retain ownership of the telecommunications systems supply business which provides maintenance and undersea cable construction. In November 2004, we agreed to sell the TGN to one of India's telephone and internet service providers for $130 million. As discussed in Note 3, the entire value of the TGN has been written-off. The sale is subject to governmental approval in the United States, India and other countries.

2004 Activity

        During 2004, the Company recorded net losses and impairments of divestitures of $116 million in continuing operations in connection with the divestiture or write-down to fair value of certain held for sale businesses. In addition, the Company also recorded losses on the sale of discontinued operations of $132 million ($123 million after tax) to write the carrying value of such assets down to their estimated fair value.

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        In connection with the divestiture program announced in November 2003, the Company divested twenty-one and liquidated four non-core businesses across all business segments, except Plastics and Adhesives and primarily within Fire and Security, for aggregate proceeds of $252 million in cash, of which $16 million of the proceeds are currently held in escrow. Total assets and total liabilities of the divested businesses were $445 million and $115 million, respectively. Total assets include cash retained by the businesses sold of $13 million. Subsequent to September 30, 2004, the Company divested an additional seven non-core businesses realizing aggregate proceeds of approximately $160 million.

        Net revenue and net loss for 2004 through the date of disposition were $460 million and $43 million, respectively, for divested companies that did not meet the criteria for discontinued operations. Net revenue and net income for the year ended September 30, 2003 were $587 million and $24 million, respectively, for divested companies that did not meet the criteria for discontinued operations.

        Net revenue of 2004 discontinued operations for the years ended September 30, 2004, 2003 and 2002 were $889 million, $815 million and $766 million, respectively. Pretax (loss) income of these discontinued operations for the years ended September 30, 2004, 2003 and 2002 were $(135) million, $7 million and $19 million, respectively.

        The following table presents balance sheet information for discontinued operations and other businesses held for sale at September 30, 2004 and 2003 ($ in millions):

		2004		2003
Accounts receivable, net		$	209	$	160
Inventories			95		61
Prepaid expenses and other current assets			95		27
Property, plant and equipment, net			96		121
Other assets			120		120
	Total assets	$	615	$	489
Accounts payable		$	155	$	119
Accrued and other current liabilities			243		73
Other liabilities			125		—
	Total liabilities	$	523	$	192

2003 Activity

        During 2003, Tyco recorded income from discontinued operations of $20 million for a restitution payment made by Frank E. Walsh Jr., a former director (see Note 14 to the Consolidated Financial Statements).

2002 Activity

        During 2002, the Company sold certain of its businesses for net proceeds of $139 million in cash that consisted primarily of businesses within Healthcare and Fire and Security. In connection with these dispositions, the Company recorded a net gain of $24 million, which is included in other expense, net in the Consolidated Statement of Operations.

        On July 8, 2002, the Company divested Tyco Capital (CIT Group Inc.) through the sale of 100% of the common shares of CIT Group Inc. ("CIT"), its principal operating subsidiary, in an initial public offering ("IPO"). Accordingly, the results of Tyco Capital are presented as discontinued operations. Operating results from the discontinued operations of Tyco Capital from October 1, 2001 through July 8, 2002 were $3.3 billion of finance income, $6.0 billion of pre-tax loss and $6.3 billion of net loss. The net loss includes a goodwill impairment charge of $6,638 million.

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        During the quarter ended March 31, 2002, Tyco experienced disruptions to its business surrounding its announced break-up plan, a downgrade in its credit ratings, and a significant decline in its market capitalization. During this same time period, CIT also experienced credit downgrades and a disruption to its historical funding base. Further, market-based information developed in connection with the Company's preliminary consideration of the proposed IPO of CIT indicated that CIT's book value exceeded its estimated fair value as of March 31, 2002. As a result, the Company performed a SFAS No. 142, "Goodwill and Other Intangible Assets," first step impairment analysis as of March 31, 2002 and concluded that an impairment charge was warranted at that time.

        Management's objective in performing the first step goodwill impairment analysis was to obtain relevant market-based data to calculate the estimated fair value of CIT as of March 31, 2002 based on its projected earnings and market factors expected to be used by market participants in ascribing value to CIT in the planned separation of CIT from Tyco. Management obtained relevant market data from financial advisors regarding the range of price to earnings multiples and market condition discounts applicable to CIT as of March 31, 2002 and applied these market data to CIT's projected annual earnings as of March 31, 2002 to calculate an estimated fair value and any resulting goodwill impairment. The estimated fair value was compared to the corresponding carrying value of CIT at March 31, 2002. As a result, the Company recorded a $4,513 million impairment charge as of March 31, 2002, which is included in discontinued operations.

        A second step goodwill impairment analysis is required whenever a reporting unit's book value exceeds estimated fair value. This analysis required the Company to estimate the fair value of the reporting unit's individual assets and liabilities to complete the analysis of goodwill as of March 31, 2002. The Company completed this second step analysis for CIT during the quarter ended June 30, 2002 and, as a result, recorded an additional goodwill impairment charge of $132 million. During the June 30, 2002 quarter, CIT experienced further credit downgrades and the business environment and other factors continued to negatively impact the likely proceeds of the IPO. As a result, the Company performed another first step and second step analysis as of June 30, 2002 in a manner consistent with the March 2002 process described above. Each of these analyses was based upon updated market data at June 30, 2002 and through the period immediately following the IPO, including the IPO proceeds. These analyses resulted in a goodwill impairment of $1,867 million. Tyco also recorded an additional impairment charge of $126 million in order to write-down its investment in CIT to fair value for a total CIT goodwill impairment of $2,125 million. This write-down was based upon net IPO proceeds of approximately $4.4 billion, after deducting estimated out-of-pocket expenses, and is included in the $6,283 million loss from discontinued operations. During the fourth quarter of 2002, Tyco recorded a loss on the sale of Tyco Capital of $59 million.

Acquisitions

        Prior to 2003, acquisitions were a significant element of our growth strategy. When we acquired a business, we began to integrate the acquired company with our existing operations immediately, and, consequently, we were generally unable to separately identify the post-acquisition financial results of acquired companies. The revenue growth or decline attributable to such acquisitions, which are included in segment discussions for 2003 and 2002, were estimates calculated by assuming the acquisitions were made at the beginning of the relevant year by adding back pre-acquisition revenue of the acquired companies for both periods. These calculations included all acquisitions with a purchase price of $10 million or more and did not include acquisitions with a purchase price of less than $10 million, due to the relative size of these smaller acquisitions compared to Tyco's operating results and the large number of acquisitions during 2003 and 2002. These smaller acquisitions represent approximately 6% of the total purchase price for all acquisitions during 2003 and 2002. Since these estimates are based on pre-acquisition revenue, they are not necessarily indicative of post-acquisition results. This calculation is similar to the method used in calculating the acquisition related pro forma

43

results of operations in Note 5 to the Consolidated Financial Statements pursuant to SFAS No. 141, "Business Combinations."

Cumulative Effect of Accounting Change

        As discussed in Note 9 to the Consolidated Financial Statements, the Company has three synthetic lease programs utilized, to some extent, by all of the Company's segments to finance capital expenditures for manufacturing machinery and equipment and for ships used by Tyco Submarine Telecommunications. During 2003, the Company adopted Financial Accounting Standards Board Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities," (revised December 2003 as FIN No. 46R) and, accordingly, restructured one of the synthetic leases to meet the requirements of FIN 46 for off-balance sheet accounting. The Company reclassified the remaining two leases as capital leases and, consequently, recorded a $75 million after-tax loss ($115 million pretax) cumulative effect adjustment. In addition, total debt increased by $498 million at the time of consolidation, July 1, 2003.

        In 2003 in conjunction with adopting FIN 46, the Company also evaluated other investments and concluded that four joint ventures that were previously accounted for under the equity method of accounting within Tyco Infrastructure Services, in which we own a minority interest, met the consolidation criteria set forth in FIN 46. Accordingly, these ventures were consolidated onto the Company's balance sheet effective July 1, 2003. The assets and liabilities of these joint ventures included on the Company's balance sheet at that time were $112 million and $96 million, respectively.

        Subsequently, these four joint ventures were deconsolidated as of March 31, 2004 with the adoption of FIN 46R. The assets and liabilities of these joint ventures included in the Company's balance sheet at September 30, 2003 were $96 million and $69 million, respectively.

Change in Fiscal Year

        On November 4, 2004, the Board of Directors approved the change in our fiscal year end from a calendar fiscal year ending September 30 to a "52-53 week" year ending on the Friday nearest September 30, such that each quarterly period will be 13 weeks in length. Once every seven years, starting in 2011, the fourth quarter reporting period will be 14 weeks. In addition, certain of our subsidiaries have consistently closed their books up to one month prior to our fiscal period end. We plan to report results for these subsidiaries using the same period as the reported results of the consolidated Company. While the expected December holiday-related slow-down in certain customer sales is expected to shift from the second fiscal quarter to the first fiscal quarter, the impact of this change is not expected to be material to the Consolidated Financial Statements. This change is also consistent with our ongoing efforts to enhance controls and improve the transparency of its reporting, as this change better aligns our external reporting with our internal operational processes. This change will be effective for our first fiscal quarter ending December 31, 2004. The results for the transition period related to this change will be reported as an adjustment within Shareholders' Equity. No transition report is required for these changes.

Critical Accounting Policies

        The preparation of Consolidated Financial Statements in conformity with Generally Accepted Accounting Principles in the United States ("GAAP") requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management's estimates are based on the relevant information available at the end of each period.

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Depreciation and Amortization Method for Security Monitoring Systems—Tyco generally considers its electronic security assets in three asset pools: internally generated residential systems, internally generated commercial systems and customer accounts acquired through the ADT dealer program. The determination of the depreciable lives of subscriber systems included in property, plant and equipment, and the amortizable lives of customer contracts and related customer relationships included in intangible assets, are primarily based on historical attrition rates, third-party lifing studies and the useful life of the underlying tangible asset. The realizable value and remaining useful lives of these assets could be impacted by changes in customer attrition rates. If the attrition rates were to rise, Tyco may be required to accelerate the depreciation and amortization.

        With respect to Tyco's depreciation policy for security monitoring systems installed in residential and commercial customer premises, the costs of these systems are combined in separate pools for internally generated residential and internally generated commercial account customers (collectively "subscriber systems"), and generally depreciated over ten to fourteen years. Tyco concluded that for residential and commercial account pools the straight-line method of depreciation over a ten to fourteen-year period continues to be appropriate given the observed actual attrition data for these pools.

        Tyco purchases residential security monitoring contracts from an external network of independent dealers who operate under the ADT dealer program. The purchase price of these customer contracts is recorded as an intangible asset (i.e., contracts and related customer relationships).

        Intangible assets arising from the ADT dealer program are amortized in pools determined by the month of contract acquisition on an accelerated basis over the period and pattern of economic benefit that is expected to be obtained from the customer relationship. Tyco believes that the accelerated method that presently best achieves the matching objective described above is the double-declining balance method based on a ten-year life for the first eight years of the estimated life of the customer relationships converting to the straight-line method of amortization for the remaining four years of the estimated relationship period. Actual attrition data is regularly reviewed in order to assess the continued applicability of the accelerated method of amortization described above.

        Attrition rates for customers in our Global Electronic Security Services business were 15.1%, 15.9% and 13.2% on a trailing 12-month basis as of September 30, 2004, 2003 and 2002, respectively.

Goodwill—In performing the annual goodwill assessment, management relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and transactions and market place data. There are inherent uncertainties related to these factors and management's judgment in applying them to the analysis of goodwill impairment. Since management's judgment is involved in performing goodwill valuation analyses, there is risk that the carrying value of our goodwill may be overstated or understated.

        We elected to make July 1 the annual impairment assessment date for all reporting units. Goodwill valuations have been calculated using an income approach based on the present value of future cash flows of each reporting unit. This approach incorporates many assumptions including future growth rates, discount factors and income tax rates. Changes in economic and operating conditions impacting these assumptions could result in a goodwill impairment in future periods.

        Disruptions to our business such as end market conditions and protracted economic weakness, unexpected significant declines in operating results of reporting units, the divestiture of a significant component of a reporting unit and market capitalization declines may result in our having to perform a SFAS No. 142 first step valuation analysis for some or all of our reporting units prior to the required annual assessment. These types of events and the resulting analysis could result in goodwill impairment charges in the future.

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        During 2004, the Company recorded goodwill impairments of $60 million of which $48 million related to divested businesses and $12 million related to businesses classified as held for sale, respectively. The Company also recorded goodwill impairments of $278 million and $1,344 million in 2003 and 2002, respectively.

Revenue Recognition—Contract sales for the installation of fire protection systems, large security intruder systems, undersea cable systems and other construction related projects are recorded primarily on the percentage-of-completion method. Profits recognized on contracts in process are based upon contracted revenue and related estimated cost to completion. The risk of this methodology is its dependence upon estimates of costs to completion, which are subject to the uncertainties inherent in long-term contracts. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the current period. Provisions for anticipated losses are made in the period in which they first become determinable. If estimates are inaccurate, there is risk that our revenue and profits for the period may be overstated or understated.

Income Taxes—In determining income (loss) for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense. Deferred tax assets are also reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods.

        In evaluating our ability to recover our deferred tax assets we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions including the amount of future state, federal and international pretax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.

        We currently have recorded significant valuation allowances that we intend to maintain until it is more likely than not the deferred tax assets will be realized. Our income tax expense recorded in the future will be reduced to the extent of decreases in our valuation allowances. The realization of our remaining deferred tax assets is primarily dependent on future taxable income. Any reduction in future taxable income including but not limited to any future restructuring activities may require that we record an additional valuation allowance against our deferred tax assets. An increase in the valuation allowance would result in additional income tax expense in such period and could have a significant impact on our future earnings. If a change in a valuation allowance occurs, which was established in connection with an acquisition, such adjustment may impact goodwill rather than the income tax provision.

        In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. These tax liabilities are reflected net of related tax loss carryforwards. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If the tax

46

liabilities relate to tax uncertainties existing at the date of the acquisition of a business, the adjustment of such tax liabilities will result in an adjustment to the goodwill recorded at the date of acquisition.

Long-Lived Assets—Assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. Impairments to long-lived assets to be disposed of are recorded based upon the fair value of the applicable assets. Since judgment is involved in determining the fair value and useful lives of long-lived assets, there is a risk that the carrying value of our long-lived assets may be overstated or understated.

Liquidity and Capital Resources

        The following table summarizes the sources of our cash flow from operating activities and the use of a portion of that cash in our operations for the years ended September 30, 2004, 2003 and 2002 ($ in millions):

		2004			2003			2002
Cash flows from operating activities:
Operating income (loss)		$	5,317		$	3,059		$	(1,472	)
Non-cash restructuring and other (credits) charges, net			(30	)		(46	)		796
Impairment of long-lived assets			99			825			3,310
Non-cash losses (gains) and impairments on divestitures, net			111			—			(24	)
Goodwill impairment			—			278			1,344
Write-off of purchased in-process research and development			—			—			18
Depreciation and amortization(1)			2,176			2,183			2,073
Deferred income taxes			172			357			(578	)
Provision for losses on accounts receivable and inventory			321			580			499
Debt and refinancing cost amortization			55			116			194
Other, net(2)			81			100			112
Net (increase) decrease in working capital			23			(226	)		368
Decrease in sale of accounts receivable			(929	)		(119	)		(56	)
Interest income			91			107			117
Interest expense			(963	)		(1,148	)		(1,076	)
Income tax expense			(1,140	)		(757	)		(202	)
Net cash provided by operating activities		$	5,384		$	5,309		$	5,423
Other cash flow items:
	Capital expenditures, net(3)	$	(1,015	)	$	(1,274	)	$	(2,823	)
	Dividends paid		(100	)		(101	)		(100	)
	Decrease in sale of accounts receivable		929			119			56
	Acquisition of customer accounts (ADT dealer program)		(254	)		(597	)		(1,138	)
	Cash paid for purchase accounting and holdback/earn-out liabilities		(107	)		(272	)		(625	)

⁽¹⁾

This amount is the sum of depreciation ($1,478 million, $1,459 million and $1,454 million in 2004, 2003 and 2002, respectively) and amortization of intangible assets ($698 million, $724 million and $619 million in 2004, 2003 and 2002, respectively).

⁽²⁾

This amount includes the add back of net losses on the retirement of debt of $284 million and $128 million in 2004 and 2003, respectively, and income from the retirement of debt of $33 million in 2002.

⁽³⁾

This includes net proceeds of $141 million, $124 million and $166 million received for the sale/disposition of property, plant and equipment in 2004, 2003 and 2002, respectively. It also includes proceeds of $30 million received in sale-leaseback transactions in 2002.

47

        The following table shows cash flow from operating activities and other cash flow items by segment for the year ended September 30, 2004 ($ in millions):

		Fire and Security			Electronics			Healthcare			Engineered Products and Services			Plastics and Adhesives			Corporate and Other			Total
Cash flows from operating activities:
Operating income (loss)		$	899		$	1,749		$	2,365		$	620		$	69		$	(385	)	$	5,317
Non-cash restructuring and other charges (credits), net			4			(33	)		—			(1	)		4			(4	)		(30	)
Impairment of long-lived assets			34			3			3			4			47			8			99
Non-cash losses and impairments on divestitures, net			51			51			4			5			—			—			111
	Depreciation		589			472			249			114			50			4			1,478
	Intangible assets amortization		543			68			78			2			7			—			698
Depreciation and amortization			1,132			540			327			116			57			4			2,176
Deferred income taxes			—			—			—			—			—			172			172
Provision for losses on accounts receivable and inventory			150			54			63			50			4			—			321
Debt and refinancing cost amortization			—			—			—			—			—			55			55
Net decrease (increase) in working capital and other(1)			(154	)		(197	)		(157	)		(45	)		8			649			104
Decrease in sale of accounts receivable(2)			(97	)		(20	)		(112	)		—			—			(700	)		(929	)
Interest income			—			—			—			—			—			91			91
Interest expense			—			—			—			—			—			(963	)		(963	)
Income tax expense			—			—			—			—			—			(1,140	)		(1,140	)
Net cash provided by (used in) operating activities		$	2,019		$	2,147		$	2,493		$	749		$	189		$	(2,213	)	$	5,384
Other cash flow items:
Capital expenditures, net			(335	)		(370	)		(239	)		(45	)		(28	)		2		$	(1,015	)
Dividends paid			—			—			—			—			—			(100	)		(100	)
Decrease in sale of accounts receivable programs			97			20			112			—			—			700			929
Acquisition of customer accounts (ADT dealer program)			(254	)		—			—			—			—			—			(254	)
Cash paid for purchase accounting and holdback/earn-out liabilities			(31	)		(48	)		(12	)		(14	)		(2	)		—			(107	)

⁽¹⁾

This amount includes the add back of $284 million related to a loss on the retirement of debt.

⁽²⁾

Fire and Security and Electronics include $91 million and $21 million, respectively, related to Corporate programs.

        The net change in total working capital, net of the effects of divestitures and acquisitions, was a cash decrease of $906 million in 2004, including cash paid for restructuring and other charges of $266 million. The components of this change are set forth in detail in our Consolidated Statements of Cash Flows. The significant changes in working capital included a $225 million increase in inventories and a $153 million increase in accounts receivable, offset by an increase of $406 million in income taxes payable. Also, during 2004 we significantly decreased our participation in our sale of accounts receivable programs resulting in an additional $929 million increase in accounts receivable. We strive to maximize our cash flow by minimizing the working capital employed in our businesses.

        During 2004, 2003 and 2002 we paid out $266 million, $503 million and $518 million, respectively, in cash related to restructuring activities. See Note 2 to our Consolidated Financial Statements for further information regarding our restructuring activities.

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        During 2004, 2003 and 2002, Tyco paid $254 million, $597 million and $1,138 million of cash, respectively, to acquire 0.3 million, 0.6 million and 1.4 million customer contracts for electronic security services through the ADT dealer program.

        During 2004, 2003 and 2002, we paid $107 million, $272 million and $625 million, respectively, in cash for purchase accounting and holdback/earn-out liabilities. Holdback liabilities represent a portion of the purchase price that is withheld from the seller pending finalization of the acquisition balance sheet. Certain acquisitions have provisions which require Tyco to make additional "earn-out" payments to the sellers if the acquired company achieves certain milestones subsequent to its acquisition by Tyco. These earn-out payments are tied to certain performance measures, such as revenue, gross margin or earnings growth.

        At September 30, 2004, the acquisition liabilities on our Consolidated Balance Sheets were $123 million, of which $29 million is included in accrued and other current liabilities and $94 million is included in other liabilities. In addition, holdback/earn-out liabilities on our Consolidated Balance Sheets were $167 million, of which $59 million are included in accrued and other current liabilities and $108 million are included in other liabilities.

        As previously discussed, during 2003, we conducted a comprehensive review of Tyco's core businesses, and as a result, implemented a divestiture program in early 2004. In November 2003 we estimated that the potential proceeds, excluding the proceeds from the sale of the TGN, could be at least $400 million once the program is completed. Cumulative proceeds through the date of this filing are approximately $412 million. As part of this program, we planned to sell the TGN, our undersea fiber optic telecommunications network. In November 2004, we agreed to sell the TGN to one of India's telephone and internet service providers for $130 million. As discussed in Note 3, the entire value of the TGN has been written-off. The sale is subject to governmental approval in the United States, India and other countries.

        We continue to fund capital expenditures to improve the cost structure of our businesses, to invest in new processes and technology, and to maintain high quality production standards. During 2003 and 2002, we spent $113 million and $1.1 billion, respectively, on construction of the TGN. Construction of the TGN was completed during 2003. Consequently, the level of capital expenditures in Electronics decreased in 2004. The level of capital expenditures in the other segments is not expected to exceed depreciation in 2005 and is expected to increase slightly relative to the level of spending in 2004.

        The provision for income taxes relating to continuing operations in the Consolidated Statement of Operations for 2004 was $1,140 million, and the amount of income taxes paid, net of refunds, during the year was $550 million. The difference is due to timing differences, as well as net operating loss carryforward and carryback utilization.

Capitalization

        Shareholders' equity was $30.3 billion at September 30, 2004, compared to $26.4 billion at September 30, 2003. This increase was due primarily to net income of $2.9 billion and foreign currency translation of $704 million.

        At September 30, 2004, total debt decreased $4.2 billion to $16.7 billion, as compared to $21.0 billion at September 30, 2003. Total debt as a percentage of total capitalization (total debt and shareholders' equity) was 36% at September 30, 2004 and 44% at September 30, 2003. The decrease in debt resulted principally from the repayments of debt detailed below partially offset by the issuance of $1.0 billion 6.0% notes due 2013 by Tyco International Group S.A. ("TIGSA") in November 2003. Our cash balance increased to $4,467 million at September 30, 2004, as compared to $4,186 million at September 30, 2003.

49

        In November 2003, TIGSA issued $1.0 billion 6.0% notes due 2013 in a private placement offering. The notes are fully and unconditionally guaranteed by Tyco. The net proceeds of approximately $988 million were used to repay a portion of the $2.0 billion outstanding under the 5-year revolving credit facility due 2006. These notes were subsequently exchanged for registered notes with substantially identical terms in an exchange offer that expired on May 3, 2004.

        In November 2003, holders of principal amount at maturity of $3,197 million of zero coupon convertible debentures due 2020 notified Tyco that they had exercised their option to require Tyco to repurchase their debentures at a price of $775.66 per $1,000 principal at maturity, representing the accreted value of the debentures on that date. On November 18, 2003, Tyco purchased these debentures for cash of $2,480 million.

        In December 2003, TIGSA entered into a $1.0 billion 364-day revolving bank credit facility, which includes a one year term-out option, and a $1.5 billion 3-year revolving bank credit facility. These facilities have a variable interest rate based on LIBOR. The margin over LIBOR payable by TIGSA can vary based on changes in its credit rating. These new facilities replaced the $1.5 billion undrawn 364-day revolving credit facility, which had been due to expire in January 2004, and the $2.0 billion drawn 5-year revolving credit facility, which had been due to expire in February 2006. As of September 30, 2004, there were no outstanding borrowings under either facility. The $1.0 billion 364-day revolving credit facility expires on December 20, 2004, and we expect that the facility will be replaced by a $1.0 billion 5-year revolving credit facility prior to its expiration. The $1.5 billion 3-year revolving credit facility expires on December 22, 2006.

        In June 2004, the Company purchased $303 million of its 8.2% notes due 2008 for cash of $341 million, which resulted in a $38 million loss, including unamortized debt issuance costs, on the retirement of debt.

        In the fourth quarter of 2004, the Company repurchased $517 million of its outstanding 2.75% convertible senior debentures with a 2008 put option. The total purchase price paid was $750 million and the repurchase resulted in a $241 million loss on the retirement of debt, including the write-off of unamortized debt issuance costs.

        Our bank credit agreements contain a number of financial covenants, such as a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization and minimum levels of net worth, and other covenants that limit our ability to pledge assets and to make substantial payments in connection with our capital shares. At September 30, 2004, we had three synthetic lease facilities, of which one has since expired on December 10, 2004, with other covenants, including interest coverage and leverage ratios. Our outstanding indentures contain customary covenants including limits on negative pledges, subsidiary debt and sale/leaseback transactions. None of these covenants is presently considered restrictive to our operations. We are currently in compliance with all of our debt covenants.

        In 2004, we made voluntary contributions to our pension plans totaling approximately $575 million.

        The above transactions support Tyco's previously discussed strategy to strengthen its balance sheet by using a portion of its excess cash to reduce debt.

        We plan to use available cash to continue to fund internal growth and cost reduction opportunities within our businesses. Additionally, we believe that our cash flow generation capability will allow us to continue to strengthen the balance sheet and return capital to shareholders. While debt reduction remains our focus in the near term, we may consider an appropriate acquisition should the opportunity arise. On December 9, 2004, the Board of Directors approved an increase in the quarterly dividend on our common shares from $0.0125 to $0.10 per share.

50

        The following table details the trend of our debt ratings:

	At September 30, 2004		At September 30, 2003
	Short Term	Long Term	Short Term	Long Term
Moody's	Prime-3	Baa3	Not prime	Ba2
Standard & Poor's	A2	BBB	A3	BBB-
Fitch	F2	BBB+	B	BB

        During 2004, Fitch upgraded our rating on the senior unsecured debt of the Company, as well as on the unconditionally guaranteed debt of TIGSA, to BBB+ from BB, and raised our commercial paper rating to F2 from B. Standard and Poor's upgraded our corporate credit and senior unsecured ratings to BBB from BBB- and our short term corporate credit and commercial paper ratings to A2 from A3. Moody's upgraded our long term rating to Baa3 from Ba2, as well as our short term rating to Prime-3 from Not Prime.

The security ratings set forth above are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.

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Commitments and Contingencies

Contractual Obligations

        A summary of our contractual obligations and commitments for debt, minimum lease payment obligations under non-cancelable operating leases and other obligations at September 30, 2004 is as follows ($ in millions):

	2005		2006		2007		2008		2009		Thereafter
Debt(1)	$	2,116	$	2,026	$	764	$	2,608	$	1,648	$	7,571
Operating leases(2)		658		529		377		273		212		862
Purchase obligations(3)		192		10		2		1		1		12
Total contractual cash obligations(4)	$	2,966	$	2,565	$	1,143	$	2,882	$	1,861	$	8,445

⁽¹⁾

Includes capital lease obligations and excludes interest.

⁽²⁾

Includes obligations under an off-balance sheet leasing arrangement under which a subsidiary of the Company has the option to buy five cable laying sea vessels (see Note 18 to the Consolidated Financial Statements).

⁽³⁾

Purchase obligations consist of commitments for purchases of good and services.

⁽⁴⁾

Minimum pension funding requirements are not included as such amounts have not been determined for all periods presented. The minimum required contributions to our pension plans are expected to be approximately $194 million in 2005.

        At September 30, 2004, the Company had outstanding letters of credit and letters of guarantee in the amount of $1.6 billion.

        At September 30, 2004, TIGSA had unsecured credit facilities of $1.0 billion due December 20, 2004, and $1.5 billion due December 22, 2006, both of which were undrawn and available (see Note 15 to the Consolidated Financial Statements). We expect that the existing $1.0 billion facility will be replaced by a $1.0 billion 5-year revolving credit facility prior to its expiration. In addition, certain of the Company's operating subsidiaries have overdraft and similar types of facilities, which total $434 million, of which $326 million was undrawn and available at September 30, 2004. These facilities expire at various dates through the year 2013, most of which are renewable and are established primarily within our international operations.

        At September 30, 2004, the Company had a contingent liability of $80 million related to the 2001 acquisition of Com-Net by Electronics. This represents the maximum amount payable to the former shareholders of Com-Net only after the construction and installation of a communications system for the State of Florida is finished and the State has approved the system based on the guidelines set forth in the contract. No provision has been made in the Consolidated Financial Statements, as the outcome of this contingency cannot be reasonably determined.

        In June 2004, TIGSA entered into a $500 million 3-year unsecured letter of credit facility. The facility provides for the issuance of letters of credit, supported by a related line of credit facility. TIGSA may only borrow under the line of credit agreement to reimburse the bank for obligations with respect to letters of credit issued under this facility. The covenants under this facility are substantially similar to TIGSA's bank credit facilities entered into during December 2003 and the indenture related to TIGSA's 6% notes due 2013 issued in November 2003. TIGSA would pay interest on any outstanding borrowings at a variable interest rate, based on the bank's base rate or the Eurodollar rate, as defined. Upon the occurrence of certain credit events, the interest rate on the outstanding borrowings becomes fixed. The issuance of letters of credit under this facility during 2004 enabled the

52

Company to release approximately $480 million of restricted cash and investments. As of September 30, 2004, there were no outstanding borrowings under this facility.

        In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company's financial position, results of operations or cash flows.

Legal Matters

Class Actions

        For a detailed discussion of contingencies related to Tyco's securities class actions, shareholder derivative litigation, ERISA litigation and investigation, and litigation against our former senior management, see Item 3. Legal Proceedings. We are generally obligated to indemnify our directors and officers and our former directors and officers who are named as defendants in some or all of these matters to the extent required by Bermuda law. In addition, our insurance carriers may decline coverage, or our coverage may be insufficient to cover our expenses and liability, in some or all of these matters. We are unable at this time to estimate what our ultimate liability in these matters may be, and it is possible that we will be required to pay judgments or settlements and incur expenses, in excess of any insurance coverage, in aggregate amounts that would have a material adverse effect on our financial position, results of operations or cash flows. At this time, it is not possible to estimate the amount of loss or probable losses, if any, that might result from an adverse resolution of these matters.

Investigation

        For a detailed discussion of contingencies related to governmental investigations related to Tyco see Item 3. Legal Proceedings—Subpoenas and Document Requests From Governmental Entities. We cannot predict when these investigations will be completed, nor can we predict what the results of these investigations may be. It is possible that we will be required to pay material fines, consent to injunctions on future conduct, lose the ability to conduct business with government instrumentalities (which in turn could negatively impact our business with non-governmental customers) or suffer other penalties, each of which could have a material adverse effect on our business. It is not possible to estimate the amount of loss, or range of possible loss, if any, that might result from an adverse resolution of these matters.

Intellectual Property Litigation

        For a detailed discussion of contingencies related to Tyco's intellectual property litigation, see Item 3. Legal Proceedings—Intellectual Property Litigation.

Environmental Matters

        For a detailed discussion of contingencies related to Tyco's environmental matters, see Item 1. Business—Environmental Matters.

Asbestos Matters

        Like many other companies, Tyco and some of our subsidiaries are named as defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials. Consistent with the national trend of increased asbestos-related litigation, we have observed an increase in the number of these lawsuits in the past several years. The majority of these cases have been filed against subsidiaries in Healthcare and Engineered Products and Services. A limited number of the cases allege premises liability, based on claims that individuals were exposed to asbestos while on a subsidiary's property. A majority of the cases involve product liability claims, based principally on allegations of past distribution

53

of heat-resistant industrial products incorporating asbestos or the past distribution of industrial valves that incorporated asbestos-containing gaskets or packing. Each case typically names between dozens to hundreds of corporate defendants.

        Tyco's involvement in asbestos cases has been limited because our subsidiaries did not mine or produce asbestos. Furthermore, in our experience, a large percentage of these claims were never substantiated and have been dismissed by the courts. We will continue to vigorously defend these lawsuits and we have not suffered an adverse verdict in a trial court proceeding related to asbestos claims.

        When appropriate, we settle claims. However, the total amount paid to date to settle and defend all asbestos claims has been immaterial. As of September 30, 2004, there were approximately 14,500 asbestos liability cases pending against us and our subsidiaries.

        We believe that we and our subsidiaries have substantial indemnification protection and insurance coverage, subject to applicable deductibles, with respect to asbestos claims. These indemnitors and the relevant carriers typically have been honoring their duty to defend and indemnify. We believe that we have valid defenses to these claims and intend to continue to defend them vigorously. Additionally, based on our historical experience in asbestos litigation and an analysis of our current cases, we believe that we have adequate amounts recorded for potential settlements and adverse judgments in asbestos-related litigation. While it is not possible at this time to determine with certainty the ultimate outcome of these asbestos-related proceedings, we believe that the final outcome of all known and anticipated future claims, after taking into account our substantial indemnification rights and insurance coverage, will not have a material adverse effect on our financial position, results of operations or cash flows.

Income Tax Matters

        Tyco and its subsidiaries' income tax returns are periodically examined by various regulatory tax authorities. In connection with such examinations, tax authorities, including the IRS, have raised issues and proposed tax deficiencies. We are reviewing the issues raised by the tax authorities and are contesting certain of the proposed tax deficiencies. Amounts related to these tax deficiencies and other tax contingencies that management has assessed as probable and estimable have been recorded through the income tax provision. We cannot provide assurance that the ultimate resolution of these tax deficiencies and contingencies will not have a material adverse effect on our financial condition, results of operations or cash flows.

        The American Jobs Creation Act of 2004 (the "AJCA"), signed into law in October 2004, replaces an export incentive with a deduction from domestic manufacturing income. It is not expected that the AJCA will have a material impact on the Company's income tax provision. The AJCA also allows the Company to repatriate up to $500 million of permanently reinvested foreign earnings in 2005 or 2006 at an effective tax rate of 5.25%. The Company is currently reviewing whether to take advantage of this new provision of the AJCA.

Other Matters

        The Company is a defendant in a number of other pending legal proceedings incidental to present and former operations, acquisitions and dispositions. The Company does not expect the outcome of these proceedings, either individually or in the aggregate, to have a material adverse effect on its financial position, results of operations or cash flows.

        As new internal controls and procedures are implemented, any reported allegations or violations of our guide to ethical conduct are investigated and appropriate disciplinary and remedial measures are taken. An allegation was brought to our attention that during the period from 1999 through 2003 certain improper payments were made by a non-U.S. subsidiary of Tyco with 2004 revenue of

54

$40 million. With the assistance of outside counsel, we conducted an internal investigation into these allegations and whether certain payments were correctly recorded in the books and records of the subsidiary. We have taken remedial steps and have reported the results of our investigation to the Department of Justice and the SEC and are cooperating with their inquiry. We do not believe this matter will have a material adverse effect on our financial position, results of operations or cash flows.

Backlog

        At September 30, 2004, we had a backlog of unfilled orders of $13.2 billion, compared to a backlog of $11.3 billion at September 30, 2003. We expect that approximately 80% of our backlog at September 30, 2004 will be filled during 2005. Backlog by reportable industry segment at September 30 is as follows ($ in millions):

	2004		2003(1)
Fire and Security	$	6,726	$	6,782
Engineered Products and Services		3,469		2,025
Electronics		2,454		2,025
Healthcare		280		297
Plastics and Adhesives		118		96
Corporate and Other		120		76
	$	13,167	$	11,301

⁽¹⁾

During the first quarter of 2004, our Precision Interconnect business was transferred from Healthcare to Electronics. In addition, the results of the TGN business held for sale are presented within Corporate and Other. The Company has conformed its segment reporting accordingly and has reclassified comparative prior period information to reflect these changes.

        Within Fire and Security, backlog decreased primarily as a result of the sale of Sonitrol by ADT Security in the second quarter of 2004. Backlog for Fire and Security includes recurring revenue-in-force, which represents twelve months' fees for monitoring and maintenance services under contract in the security business. The amount of recurring revenue-in-force at September 30, 2004 and September 30, 2003 was $3,559 million and $3,607 million, respectively. Within Engineered Products and Services, backlog increased primarily as a result of a $1.4 billion adjustment related to a change in how we classify sub-contract costs that are paid by Infrastructure Services and re-billed to their customers. These costs have historically been treated as "pass through" and were therefore not previously included in reported revenue and cost of revenue of Infrastructure Services. During 2004, the Company began reflecting these subcontract costs in both revenue and cost of revenue of Infrastructure Services. Within Electronics, backlog increased primarily due to stronger orders resulting from an overall improvement in business conditions across the vast majority of its end markets. Backlog in Healthcare and Plastics and Adhesives represents unfilled orders, which, in the nature of the businesses, are normally shipped shortly after purchase orders are received. We do not view backlog in Healthcare and Plastics and Adhesives to be a significant indicator of the level of future sales activity.

55

Off-Balance Sheet Arrangements

Sale of Accounts Receivable

        Tyco has several programs under which it may sell participating interests in accounts receivable to investors who, in turn, purchase and receive ownership and security interests in those receivables. As collections reduce accounts receivable included in the pool, the Company sells new receivables. The Company has the risk of credit loss on the receivables and, accordingly, the full amount of the reserve has been retained on the Consolidated Balance Sheets. The proceeds from the sales were used to repay short-term and long-term borrowings and for working capital and other corporate purposes and are reported as operating cash flows in the Consolidated Statements of Cash Flows. The sale proceeds are less than the face amount of accounts receivable sold by an amount that approximates the cost that would be incurred if commercial paper were issued backed by these accounts receivable. The discount from the face amount is accounted for as a loss on the sale of receivables and has been included in selling, general and administrative expenses in the Consolidated Statements of Operations. Such discount aggregated $18 million, $29 million, and $17 million, or 3.1%, 3.5%, and 2.7% of the weighted-average balance of the receivables outstanding, during 2004, 2003 and 2002, respectively. The Company retains collection and administrative responsibilities for the participating interests in the defined pool. During 2004, the Company reduced outstanding balances under its accounts receivable programs by $929 million, of which $812 million relates to three of its corporate accounts receivable programs. At September 30, 2004 and 2003, the availability under corporate programs was $625 million and $1,025 million, respectively. Subsequent to September 30, 2004, the Company further reduced the availability under these programs to $550 million. At September 30, 2004 and 2003, the amounts utilized under these programs was zero and $803 million, respectively. The remaining reduction related to certain of our international businesses selling fewer accounts receivable as a short-term financing mechanism. These transactions qualify as true sales. The aggregate amount outstanding under these arrangements was $99 million and $202 million at September 30, 2004 and 2003, respectively.

Variable Interest Entities

        The Company has programs under which it sells machinery and equipment to investors who, in turn, purchase and receive ownership and security interests in those assets. As such, the Company may have certain investments in those affiliated companies whereby it provides varying degrees of financial support and where the investors are entitled to a share in the results of those entities but do not consolidate these entities. While these entities may be substantive operating companies, they have been evaluated for potential consolidation under FIN 46.

        As previously discussed, during 2003 the Company restructured one of the synthetic leases to meet the requirements of FIN 46 for off-balance sheet accounting. In 2003 in conjunction with adopting FIN 46, the Company also evaluated other investments and concluded that four joint ventures that were previously accounted for under the equity method of accounting within Tyco Infrastructure Services, in which we own a minority interest, met the consolidation criteria set forth in FIN 46. Accordingly, these ventures were consolidated onto the Company's balance sheet effective July 1, 2003, and were subsequently deconsolidated as of March 31, 2004 upon the adoption of FIN 46R. The assets and liabilities of these joint ventures included in the Company's Consolidated Balance Sheets at September 30, 2003 were $96 million and $69 million, respectively.

Guarantees

        Certain of the Company's business segments have guaranteed the performance of third-parties and provided financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from 2005 through the completion of such transactions. The guarantees would be triggered in the event of nonperformance and the potential exposure for

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nonperformance under the guarantees would not have a material effect on the Company's financial position, results of operations or cash flows.

        In disposing of assets or businesses, the Company often provides representations, warranties and/or indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. The Company does not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we have no reason to believe that these uncertainties would have a material adverse effect on the Company's financial position, annual results of operations or cash flows.

        The Company has recorded liabilities for known indemnifications included as part of environmental liabilities. See Item I. Business—Environmental Matters for a discussion of these liabilities.

        The Company has guaranteed the fair value of certain vessels not to exceed $235 million, and as of September 30, 2004 expects the obligation to be $54 million, which is recorded in the accompanying Consolidated Balance Sheets, based on its estimate of fair value of the vessels (see "Liquidity and Capital Resources—Contractual Obligations" above).

        As a result of exiting certain facilities as part of restructuring and acquisition plans, or otherwise, the Company continues to lease certain properties which it has vacated but has sub-let to third parties. In the event the third parties vacate the premises, the Company would be legally obligated under master lease arrangements. The Company believes that the financial risk of default by sub-lessors is not material, individually and in the aggregate, to the Company's financial position, results of operations or cash flows.

        In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company's financial position, results of operations or cash flows.

        The Company generally records estimated product warranty costs at the time of sale. For further information on estimated product warranty, see Notes 1 and 16 to the Consolidated Financial Statements.

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Accounting Pronouncements

        In November 2003, the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board ("FASB") reached a consensus on EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." EITF 03-1 provides guidance on determining other-than-temporary impairments and its application to marketable equity securities and debt securities accounted for under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." In September 2004, the FASB issued FASB Staff Position ("FSP") EITF Issue 03-1-1 which delayed the effective date for the measurement and recognition guidance contained in the EITF 03-1 pending finalization of the draft FSP EITF Issue 03-1-a, "Implementation Guidance for the Application of Paragraph 16 of EITF 03-1." The disclosure requirements of EITF 03-1 remain in effect. The Company adopted the disclosure requirement of EITF 03-1 as of September 30, 2004. The adoption of the recognition and measurement provisions of EITF 03-1 are not expected to have a material impact on our results of operations, financial position or cash flows.

        In December 2003, the FASB issued FIN 46 (revised December 2003 as FIN 46R). FIN 46R further explains how to identify Variable Interest Entities ("VIE") and how to determine when a business enterprise should include the assets, liabilities, noncontrolling interest and results of VIE in its financial statements. The Company adopted FIN 46R as of March 31, 2004. As a result, the joint ventures that were previously consolidated under FIN 46 were deconsolidated effective March 31, 2004. See Note 9 of the Consolidated Financial Statements for further discussion of the impact of FIN 46R.

        In December 2003, the FASB issued a revision to SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," to improve financial statement disclosure for defined benefit plans. This statement requires additional disclosures about the assets (including plan assets by category), obligations and cash flows of defined pension plans and other defined benefit postretirement plans. It also requires reporting of various elements of pension and other postretirement benefit costs on a quarterly basis. Generally, the disclosure requirements are effective for interim periods beginning after December 15, 2003; however, information about foreign plans is effective for fiscal years ending after June 15, 2004. Tyco adopted the revised SFAS No. 132 during the quarter ended March 31, 2004. See Note 19 of the Consolidated Financial Statements for further discussion of retirement plans.

        In December 2003, the SEC issued Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which supercedes SAB 101, "Revenue Recognition in Financial Statements." SAB 104's primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superceded as a result of the issuance of EITF 00-21, "Revenue Arrangements with Multiple Deliverables." The issuance of SAB 104 reflects the concepts contained in EITF 00-21. The other revenue recognition concepts contained in SAB 101 remain largely unchanged. The issuance of SAB 104 did not have a material impact on our results of operations, financial position or cash flows.

        In May 2004, the FASB issued FSP No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003." FSP No. 106-2 provides guidance on the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") on postretirement health care plans that provide prescription drug benefits. FSP No. 106-2 also requires certain disclosures regarding the effect of the federal subsidy provided by the Act. FSP No. 106-2 is effective for Tyco in the fourth quarter of 2004. The adoption of FSP No. 106-2 did not have a material impact on our results of operations, financial position or cash flows.

        In September 2004, the EITF reached a consensus on EITF Issue No. 04-8 "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share." This EITF requires that contingently convertible debt securities with a market price trigger be included in diluted earnings per share, regardless of whether the market price trigger has been met. EITF 04-8 is effective for all

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periods ending after December 15, 2004 and requires retroactive restatement of previously reported earnings per share. Any contingently convertible instrument that is settled in cash before December 31, 2004 would not be reflected in the retroactive restatement. The adoption of this EITF is not expected to have a material impact on our results of operations, financial position or cash flows.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS No. 151 amends Accounting Research Bulletin ("ARB") No. 43, Chapter 4, to clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges. In addition, SFAS No. 151 requires that allocation of fixed production overhead to inventory be based on the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company is currently assessing the impact that SFAS No. 151 will have on the results of operations, financial position or cash flows.

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Risk Factors

You should carefully consider the risks described below before investing in our publicly traded securities. The risks described below are not the only ones facing us. Our business is also subject to the risks that affect many other companies, such as competition, technological obsolescence, labor relations, general economic conditions, geopolitical events and international operations. Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations and our liquidity.

Risks Relating to Actions of Tyco's Former Senior Corporate Management

Pending litigation could have a material adverse effect on our liquidity and financial condition.

        As a result of actions taken by our former senior corporate management, Tyco, some members of our former senior corporate management, former members of our Board of Directors and our current Chief Executive Officer are named defendants in a number of purported class actions alleging violations of the disclosure provisions of the federal securities laws. Tyco, certain of our current and former employees, some members of our former senior corporate management and some former members of our Board of Directors also are named as defendants in several ERISA class actions. In addition, Tyco and some members of our former senior corporate management are subject to an SEC inquiry, and some members of our former senior corporate management are named as defendants in criminal cases being prosecuted by the District Attorney of New York County. The findings and outcomes of the prosecutions and the SEC civil action may affect the course of the purported securities class actions and ERISA class actions pending against Tyco. We are generally obligated to indemnify our directors and officers and our former directors and officers who are also named as defendants in some or all of these matters to the extent required by Bermuda law. In addition, our insurance carriers may decline coverage, or our coverage may be insufficient to cover our expenses and liability, in some or all of these matters. We are unable at this time to estimate what our ultimate liability in these matters may be, and it is possible that we will be required to pay judgments or settlements and incur expenses, in excess of any insurance coverage, in aggregate amounts that would have a material adverse effect on our financial position, results of operations or cash flows. At this time, it is not possible to estimate the amount of loss or probable losses, if any, that might result from an adverse resolution of these matters.

Continued scrutiny resulting from ongoing governmental investigations may have an adverse effect on our business.

        We and others have received subpoenas and requests from the SEC's Division of Enforcement, the District Attorney of New York County, the Department of Labor and others seeking the production of voluminous documents in connection with various investigations into our governance, management, operations, accounting and related controls. Certain current and former employees in Fire and Security received subpoenas from the SEC's Division of Enforcement seeking testimony related to past accounting practices regarding the ADT dealer connect fees. As previously reported in our periodic filings, these practices have been discontinued. The Department of Labor is investigating Tyco and the administrators of certain of our benefit plans. We cannot predict when these investigations will be completed, nor can we predict what the results of these investigations may be. It is possible that we will be required to pay material fines, consent to injunctions on future conduct, lose the ability to conduct business with government instrumentalities (which in turn could negatively impact our business with non-governmental customers) or suffer other penalties, each of which could have a material adverse effect on our business. We cannot provide assurance that the effects and results of these or other investigations will not be material and adverse to our business, financial condition, results of operations or cash flows.

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Examinations and audits by tax authorities, including the IRS, could result in additional tax payments for prior periods.

        Tyco and our subsidiaries' income tax returns are periodically examined by various tax authorities. Tyco is currently under audit by the IRS for the years 1997 to 2000. In connection with such examinations, tax authorities, including the IRS, have raised issues and proposed tax deficiencies. We are reviewing the issues raised by the tax authorities and are contesting certain of the proposed tax deficiencies. Amounts related to these tax deficiencies and other tax contingencies that management has assessed as probable and estimable have been accrued through the income tax provision. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. These tax liabilities are reflected net of related tax loss carryforwards. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.

        In connection with the IRS audits for the years 1997-2000, the Company prepared proposed adjustments to these prior period U.S. federal income tax returns. The proposed amendments are currently being reviewed by the IRS and if accepted will result in receipt of refunds or credits and a corresponding reduction to our deferred tax assets and liabilities. The Company may prepare proposed amendments to prior period U.S. federal income tax returns for additional periods.

Ongoing SEC inquiries may require us to further amend or restate our public disclosures.

        We are subject to inquiries by the SEC's Division of Enforcement. We cannot provide assurance that the resolution of the Division of Enforcement's inquiries will not necessitate further amendments or restatements to our previously-filed periodic reports or lead to some enforcement proceedings against Tyco. The SEC's Division of Enforcement has not completed its review of prior management's actions and our accounting, including the matters covered by the Company's Current Report on Form 8-K filed on December 30, 2002.

Further instances of breakdowns in our internal controls and procedures could have an adverse effect on us.

        Management has determined that, in the past, Tyco in general suffered from:

•

poor documentation;



•

inadequate policies and procedures to prevent the misconduct of senior corporate executives;



•

inadequate procedures for proper corporate authorizations;



•

inadequate approval procedures and documentation;



•

a lack of oversight by senior management at the corporate level;



•

a pattern of using aggressive accounting that, even when in accordance with GAAP, was intended to increase reported earnings above what they would have been if more conservative accounting had been employed;



•

pressure on, and inducements to, segment and unit managers to increase current earnings, including decisions as to what accounting treatment to employ; and



•

a lack of a stated and demonstrable commitment by former senior corporate management to set high standards of ethics, integrity, accounting, and corporate governance.

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While we have implemented new procedures, we cannot provide assurance that we will not discover that there have been further instances of breakdowns in our internal controls and procedures.

Material adverse legal judgments, fines, penalties or settlements could adversely affect our financial health and prevent us from fulfilling our obligations under our outstanding indebtedness.

        We estimate that our available cash and our cash flow from operations will be adequate to fund our operations and service our debt for the forseeable future. In making this estimate, we have not assumed the need to make any material payments in connection with our pending litigation or investigations. Any material adverse legal judgments, fines, penalties or settlements arising from our pending investigations and litigation could require additional funding. If such developments require us to obtain additional funding, we cannot provide assurance that we will be able to obtain the additional funding that we need on commercially reasonable terms or at all, which could have a material adverse effect on our results of operations and cash flows.

        Such an outcome could have important consequences to you. For example, it could:

•

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes, including debt reduction or dividend payments;



•

increase our vulnerability to general adverse economic and industry conditions;



•

limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;



•

restrict our ability to introduce new technologies or exploit business opportunities;



•

make it more difficult for us to satisfy our payment obligations with respect to our outstanding indebtedness; and



•

increase the difficulty and/or cost to us of refinancing our indebtedness.

Additional negative publicity may adversely affect our business.

        As a result of actions taken by our former senior corporate management, Tyco was the subject of continuing negative publicity focusing on these actions. This negative publicity contributed to significant declines in the prices of our publicly traded securities in 2002 and brought increased regulatory scrutiny upon us. Additional negative publicity related to former senior corporate management's actions could have a material adverse effect on our results of operations and cash flows and the market price of our publicly traded securities.

Our senior corporate management team is required to devote significant attention to matters arising from actions of prior management.

        We replaced our senior corporate executives with a new team during 2002 through 2004, and all of the former members of our Board of Directors determined not to stand for reelection in March 2003. A new Board of Directors was elected at our annual general meeting of shareholders in March 2003. We cannot provide assurance that this major restructuring of our Board of Directors and senior management team, and the accompanying distractions related to matters arising from the actions of prior management will not adversely affect our results of operations.

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Risks Relating to Our Businesses

Cyclical industry and economic conditions have affected and may continue to adversely affect our
        financial condition and results of operations.

        Our operating results in some of our segments are affected adversely by the general cyclical pattern of the industries in which they operate. For example, demand for the products and services of Fire and Security and Engineered Products and Services is significantly affected by levels of commercial construction and consumer and business discretionary spending. Also, the electronic components business within Electronics is heavily dependent on the end markets it serves and therefore can be affected by the demand and capital investment patterns of these markets, which could impact the margins in this business. This cyclical impact can be amplified because some of our businesses purchase products from other of our businesses. For example, Fire and Security purchases certain products sold by Engineered Products and Services. Therefore, a drop in demand for our fire prevention products due to lower new residential or office construction or other factors can cause a drop in demand for certain of our products sold by Engineered Products and Services.

Our operations expose us to the risk of material environmental liabilities, litigation and violations.

        We are subject to numerous foreign, federal, state and local environmental protection and health and safety laws governing, among other things:

•

the generation, storage, use and transportation of hazardous materials;



•

emissions or discharges of substances into the environment; and



•

the health and safety of our employees.

There can be no assurances that we have been or will be at all times in compliance with environmental and health and safety laws. If we violate these laws, we could be fined, criminally charged or otherwise sanctioned by regulators. For example, on August 17, 2004, one of our subsidiaries in Electronics was sentenced for Clean Water Act violations at three of its manufacturing plants in Connecticut, pursuant to which it paid a $6 million fine and an additional $4 million to fund environmental projects designed to improve the environment for local residents. See Item 3. Legal Proceedings—Environmental Litigation.

        Certain environmental laws assess liability on current or previous owners or operators of real property for the cost of removal or remediation of hazardous substances at their properties or at properties at which they have disposed of hazardous substances and costs to restore natural resources. In addition to cleanup costs resulting from environmental laws, private parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances used, stored or disposed of by us or contained in our products.

        We have been notified by the U.S. Environmental Protection Agency, certain foreign and state environmental agencies, and some third parties that conditions at a number of sites where we and others disposed of hazardous substances require cleanup and other possible remedial action and may require that we reimburse the government or otherwise pay for the cost of cleanup of those sites and/or for natural resource damages. We also have a number of projects underway at several of our current and former manufacturing facilities in order to comply with environmental laws or otherwise remediate environmental contamination. These projects relate to a variety of activities, including:

•

radioactive materials decontamination and decommissioning;



•

solvent, metal and other hazardous substance contamination cleanup; and



•

oil spill equipment upgrades and replacement.

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These projects, some of which are voluntary and some of which are required under applicable law, involve both remediation expenses and capital improvements. In addition, we remain responsible for certain environmental issues at manufacturing locations previously sold by us.

        The ultimate cost of site cleanup is difficult to predict given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations and alternative cleanup methods. We have concluded that it is probable that we would incur remedial costs in the range of approximately $167 million to $443 million. We concluded that the best estimate within this range is approximately $265 million, of which $42 million is included in accrued and other current liabilities and $223 million is included in other liabilities on our Consolidated Balance Sheets as of September 30, 2004. Environmental laws are complex, change frequently and have tended to become more stringent over time. While we have budgeted for future capital and operating expenditures to maintain compliance with such laws, we cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws, or our liabilities arising from past or future releases of, or exposures to, hazardous substances will not exceed our estimates or adversely affect our financial condition and results of operations or that we will not be subject to additional environmental claims for personal injury or cleanup in the future based on our past, present or future business activities.

We may be required to recognize additional impairment charges.

        Pursuant to GAAP, we are required to periodically assess our goodwill, intangibles and other long-lived assets to determine if they are impaired. Disruptions to our business, end market conditions and protracted economic weakness, unexpected significant declines in operating results of reporting units, divestitures and market capitalization declines may result in additional charges to goodwill and other asset impairments. Future impairment charges could substantially affect our reported earnings in the period of such charge. In addition, such charges would reduce our consolidated net worth and our shareholders' equity, increasing our debt-to-total-capitalization ratio. Such reduction in consolidated net worth and increase in debt as a percentage of total capitalization could result in a default under our credit facilities.

Foreign currency exchange rate, commodity price and interest rate fluctuations may adversely affect our results.

        We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates, commodity prices and interest rates. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

        Our net revenue derived from sales in non-U.S. markets for 2004, 2003 and 2002 were 47.4%, 45.0% and 41.8%, respectively, and we expect revenue from non-U.S. markets to continue to represent a significant portion of our net revenue. Therefore, when the U.S. Dollar strengthens in relation to the foreign currencies of the countries where we sell our products, such as the Euro, our U.S. Dollar-reported revenue and income will decrease. changes in the relative values of currencies occur from time to time and may, in some instances, have a significant effect on our results of operations. Our financial statements reflect recalculations of items denominated in non-U.S. currencies to U.S. Dollars, our functional currency.

        We are a large buyer of steel and resin in the United States. We are also a large buyer of other commodities, including copper, brass, gold, paper, pulp and cotton. Volatility in the prices of these commodities could increase the costs of our products and services. We may not be able to pass on these costs to our customers and this could have a material adverse effect on our results of operations and cash flows.

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        We monitor these exposures as an integral part of our overall risk management program. In some cases, we purchase hedges or enter into contracts to insulate our results of operations from these fluctuations. Nevertheless, changes in currency exchange rates, commodity prices and interest rates may have a material adverse effects on our results of operations and financial condition.

We are subject to a variety of litigation in the course of our business that could cause a material adverse effect on our results of operations and financial condition.

        In the ordinary course of business, we are subject to a significant amount of litigation, including litigation alleging the infringement of intellectual property rights, litigation alleging anti-competitive behavior and product liability litigation. In certain circumstances, patent infringement and anti-trust laws permit successful plaintiffs to recover treble damages. In addition, our Healthcare business is subject to regulation and potential litigation. The defense of these lawsuits may divert our management's attention, and we may incur significant expenses in defending these lawsuits. In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, that could cause a material adverse effect on our financial condition and results of operations.

Our Healthcare business is subject to extensive regulation by the government and failure to comply with those regulations could have a material adverse effect on our results of operations and financial condition.

        The U.S. Food and Drug Administration regulates the approval, manufacturing and sale and marketing of many of our healthcare products. Failure to comply with current Good Manufacturing Practices and other applicable regulations and quality assurance guidelines could lead to temporary manufacturing shutdowns, product shortages or delays in product manufacturing. Efficacy or safety concerns, an increase in trends of adverse events in the marketplace, and/or manufacturing quality issues with respect to our products could lead to product recalls, withdrawals or declining sales.

Our ADT business has generally experienced higher rates of customer attrition, which may reduce our future revenue and has caused us to change the useful life of accounts, increasing our depreciation and amortization expense.

        Attrition rates for customers in our global electronic security services business were 15.1%, 15.9% and 13.2% on a trailing 12-month basis as of September 30, 2004, 2003 and 2002, respectively. If attrition rates show an upward trend, ADT's recurring revenue and results of operations will be adversely affected. Tyco amortizes the costs of ADT's contracts and related customer relationships purchased through the ADT dealer program using a double-declining balance method based on a ten-year life for the first eight years of the estimated life of the customer relationships, converting to the straight-line method of amortization to completely amortize the asset pool by the end of the twelfth year. Internally generated residential and commercial account pools are amortized using a straight-line method over ten to fourteen years. If the attrition rates were to rise for these account pools, then Tyco may be required to accelerate the amortization of the costs related to these pools, which could cause a material adverse effect on our financial condition, results of operations and cash flows.

Our reputation and our ability to do business may be impaired by reckless or corrupt behavior by any of our employees or agents or those of our subsidiaries.

        Tyco and its subsidiaries operate in many parts of the world that have experienced governmental corruption to some degree, including, but not limited to, Asia, Latin America and Eastern Europe. Tyco's policy mandates strict compliance with the U.S. Foreign Corrupt Practices Act, as amended, and local laws prohibiting corrupt payments to government officials. Nonetheless, we cannot provide assurance that our internal control policies and procedures will always protect us from reckless or

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criminal acts committed by our employees that would violate the U.S. and/or foreign laws governing payments to government officials. These actions could result in criminal or civil penalties, including substantial monetary fines, against us or our subsidiaries and could damage our reputation and, therefore, our ability to do business.

        An allegation was brought to our attention that during the period from 1999 through 2003 certain improper payments were made by a non-U.S. subsidiary of Tyco with 2004 revenue of $40 million. With the assistance of outside counsel, we conducted an internal investigation into these allegations and whether certain payments were correctly recorded in the books and records of the subsidiary. We have taken remedial steps and have reported the results of our investigation to the Department of Justice and the SEC and are cooperating with their inquiry.

Covenants in our debt instruments may adversely affect us.

        Our bank credit agreements contain financial covenants, such as a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization and minimum levels of net worth, and other covenants that limit our ability to pledge assets and to make substantial payments in connection with our capital shares. We have synthetic lease facilities with other covenants, including interest coverage and leverage ratios. Our outstanding indentures contain customary covenants including limits on negative pledges, subsidiary debt and sale/leaseback transactions.

        Although we believe none of these covenants are presently restrictive to our operations, our ability to meet the financial covenants can be affected by events beyond our control, and we cannot provide assurance that we will meet those tests. A breach of any of these covenants could result in a default under our credit agreements or indentures. Upon the occurrence of an event of default under any of our credit facilities or indentures, the lenders or trustees could elect to declare all amounts outstanding thereunder to be immediately due and payable and terminate all commitments to extend further credit. If the lenders or trustees accelerate the repayment of borrowings, we cannot provide assurance that we will have sufficient assets to repay our credit facilities and our other indebtedness. Acceleration of any obligation under any of our material debt instruments will permit the holders of our other material debt to accelerate their obligations. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.

Downgrades of our debt ratings would adversely affect us.

        Certain downgrades by Moody's and S&P would permit the providers of our receivables facilities, to the extent that our receivables facilities are utilized, to cease further purchases under the facilities and would increase the interest cost of our credit facility borrowings. Downgrades may also increase our cost of capital and make it more difficult for us to obtain new financing.

Risks Relating to Our Jurisdiction of Incorporation

Legislation and negative publicity regarding Bermuda companies could increase our tax burden and
        affect our operating results.

Legislation Relating to Government Contracts

        We continue to assess the potential impact of various U.S. federal and state legislative proposals that would deny government contracts to U.S. companies that move their corporate location abroad. The legislative proposals could cover the 1997 acquisition of Tyco International Ltd., a Massachusetts corporation, by ADT Limited (a public company that had been located in Bermuda since the 1980's with origins dating back to the United Kingdom since the early 1900's), as a result of which ADT changed its name to Tyco International Ltd. and became the parent to the Tyco group.

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        In 2003, the State of California adopted legislation intended to limit the eligibility of certain Bermuda and other foreign-chartered companies to participate in certain state contracts. To date Tyco companies have requested waivers which have been granted or are still pending with only one request having been denied. However, there is no reliable process for how that waiver authority will be exercised and how the provision for such waivers will affect Tyco's business.

        In addition, the U.S. federal government and various other states and municipalities have proposed or may propose legislation that would deny government contracts to U.S. companies that move their corporate location abroad. We are unable to predict with any level of certainty the likelihood or final form in which any such proposed legislation might become law, the nature of regulations that may be promulgated under any future legislative enactments, or the impact such enactments and increased regulatory scrutiny may have on our business.

        Tyco's revenues related to direct sales to the U.S. federal government and the State of California accounted for less than 2.0% and 0.1%, respectively, of our total net revenues for 2004. We are unable to predict, however, whether the final form of the proposed legislation discussed above would also affect Tyco's indirect sales to the U.S. federal or state governments or the willingness of Tyco's non-governmental customers to do business with us. As a result of these uncertainties, we are unable to assess the potential impact on us of any proposed legislation in this area and can provide no assurance that the impact will not be materially adverse.

Tax Legislation

        The U.S. Congress has in the past considered legislation affecting the tax treatment of U.S. companies that have undertaken certain types of expatriation transactions. Recently, the U.S. Congress enacted such legislation, which did not, however, retroactively apply to the 1997 acquisition of Tyco International Ltd. by ADT Limited. We expect various tax proposals to be introduced in the U.S. Congress in the future and cannot provide assurance that these proposals would not have adverse effects on Tyco if enacted. Such adverse effects could include substantially reducing the tax benefits of our corporate structure, materially increasing our tax burden or otherwise adversely affecting our business.

Negative Publicity

        There is continuing negative publicity regarding, and criticism of, U.S. companies' use of, or relocation to, offshore jurisdictions, including Bermuda. As a Bermuda company, this negative publicity could harm our reputation and impair our ability to generate new business if companies or government agencies decline to do business with us as a result of the negative public image of Bermuda companies or the possibility of our customers receiving negative media attention from doing business with a Bermuda company.

Bermuda law differs from the laws in effect in the United States and may afford less protection to holders of our securities.

        We are organized under the laws of Bermuda. It may not be possible to enforce court judgments obtained in the United States against us in Bermuda based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some doubt as to whether the courts of Bermuda would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the United States and Bermuda do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any

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U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Bermuda.

        As a Bermuda company, Tyco is governed by the Companies Act 1981 of Bermuda, which differs in some material respects from laws generally applicable to United States corporations and shareholders, including, among others, differences relating to interested director and officer transactions, shareholder lawsuits and indemnification. Likewise, the duties of directors and officers of a Bermuda company are generally owed to the company only. Shareholders of Bermuda companies do not generally have a personal right of action against directors or officers of the company and may only exercise such rights of action on behalf of the company in limited circumstances. Under Bermuda law, a company may also agree to indemnify directors and officers for any personal liability, not involving fraud or dishonesty, incurred in relation to the company. Thus, holders of Tyco securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.

Forward-Looking Information

        Certain statements in this report are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "project" and similar expressions are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in press releases, written statements or other documents filed with the Securities and Exchange Commission, or in Tyco's communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls, regarding expectations with respect to sales, earnings, cash flows, operating efficiencies, product expansion, backlog, the consummation and benefits of acquisitions and divestitures or other matters, as well as financings and repurchases of debt or equity securities, are subject to known and unknown risks, uncertainties and contingencies. Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements include, among other things:

•

overall economic and business conditions;



•

the demand for Tyco's goods and services;



•

competitive factors in the industries in which Tyco competes;



•

changes in tax requirements (including tax rate changes, new tax laws and revised tax law interpretations);



•

results and consequences of Tyco's internal investigation and governmental investigations concerning the Company's governance, management, internal controls and operations;



•

the outcome of litigation and governmental proceedings as a result of actions taken by our former senior corporate management;



•

the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures;



•

our ability to operate within the limitations imposed by financing arrangements and to maintain our credit ratings;



•

interest rate fluctuations and other changes in borrowing costs;



•

other capital market conditions, including foreign currency rate fluctuations;

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•

fluctuations in the prices of commodities, including steel and resin;



•

economic and political conditions in international markets, including governmental changes and restrictions on the ability to transfer capital across borders;



•

the ability to achieve cost savings in connection with the Company's strategic restructuring and Six Sigma initiatives;



•

potential further impairment of our goodwill;



•

the impact of fluctuations in the share price of Tyco common shares;



•

changes in U.S. and non-U.S. government regulations in general, and in particular changes in rules and regulations regarding the safety, efficacy, sales, promotions, insurance reimbursement and pricing of Tyco's disposable medical products and other specialty products, and regarding Tyco's ability to operate and set prices with respect to its undersea cable communications systems;



•

the possible effects on Tyco of future legislation in the U.S. that may limit or eliminate potential U.S. tax benefits resulting from Tyco's incorporation in Bermuda or deny U.S. government contracts to Tyco based upon its incorporation in Bermuda; and



•

the potential distraction costs associated with negative publicity relating to actions of our former senior corporate management.

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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

        We are subject to market risk associated with changes in interest rates and foreign currency exchange rates. In order to manage the volatility relating to our more significant market risks, we enter into forward foreign currency exchange contracts, cross-currency swaps, foreign currency options, and interest rate swaps. We do not anticipate any material changes in our primary market risk exposures in 2005.

        We utilize established risk management policies and procedures in executing derivative financial instrument transactions. We do not execute transactions or hold derivative financial instruments for trading or speculative purposes. Derivative financial instruments related to interest rate sensitivity of debt obligations, intercompany cross-border transactions and anticipated non-functional currency cash flows, are used with the goal of mitigating a significant portion of these exposures when it is cost effective to do so. Counterparties to derivative financial instruments are limited to financial institutions with at least an A/A2 long-term debt rating.

Interest Rate Sensitivity

        The table below provides information about our financial instruments that are sensitive to changes in interest rates, including debt obligations and interest rate swaps. For debt obligations, the table presents cash flows of principal repayment and weighted-average interest rates. For interest rate and cross-currency swaps, the table presents notional amounts at the current market price rate and weighted average interest rates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. The amounts included in the table below are in U.S. Dollars, unless noted ($ in millions):

			2005		2006		2007		2008		2009		Thereafter		Total	Fair Value
Total debt:
	Fixed rate (US$)		1,428		1,990		5		2,590		802		6,543		13,358	15,864
		Average interest rate	6.1	%	6.0	%	6.4	%	2.9	%	6.1	%	5.8	%	—	—
	Fixed rate (Euro)		624		6		742		2		833		2		2,209	2,323
		Average interest rate	4.4	%	3.7	%	6.1	%	7.5	%	5.5	%	8.1	%	—	—
	Fixed rate (Yen)		1		1		—		—		—		54		56	56
		Average interest rate	2.9	%	2.1	%	—		—		—		5.0	%	—	—
	Fixed rate (British Pound)		—		—		—		—		—		883		883	923
		Average interest rate	—		—		—		—		—		6.4	%	—	—
	Fixed rate (Other)		11		9		5		2		—		—		27	27
		Average interest rate	6.3	%	6.1	%	6.8	%	6.4	%	—		—		—	—
	Variable rate (US$)		8		9		1		1		1		89		109	109
		Average interest rate(1)	2.7	%	3.0	%	4.2	%	3.4	%	3.7	%	8.0	%	—	—
	Variable rate (Euro)		26		11		11		13		12		—		73	73
		Average interest rate(1)	3.4	%	3.4	%	3.6	%	3.7	%	3.7	%	—		—	—
	Variable rate (Other)		18		—		—		—		—		—		18	18
		Average interest rate(1)	11.4	%	—		—		—		—		—		—	—
Cross Currency Swap:
	Fixed to variable (British Pound)		—		—		—		—		—		359		359	71
	Average pay rate(1)		—		—		—		—		—		3.5	%	—	—
	Average receive rate		—		—		—		—		—		6.5	%	—	—
Interest rate swaps:
	Fixed to variable (US$)		—		—		—		—		—		2,750		2,750	55
	Average pay rate(1)		—		—		—		—		—		3.6	%	—	—
	Average receive rate		—		—		—		—		—		6.3	%	—	—
	Fixed to variable (British Pound)		—		—		—		—		—		359		359	(2	)
	Average pay rate(1)		—		—		—		—		—		3.5	%	—	—
	Average receive rate		—		—		—		—		—		6.5	%	—	—

⁽¹⁾

Weighted-average variable interest rates are based on applicable rates at September 30, 2004 per the terms of the contracts of the related financial instruments.

Exchange Rate Sensitivity

        The table below provides information about our financial instruments that are sensitive to foreign currency exchange rates. These instruments include debt obligations and forward foreign currency exchange

70

contracts. For debt obligations, the table presents cash flows of principal repayment and weighted-average interest rates. For forward foreign currency exchange contracts, the table presents notional amounts and weighted-average contractual exchange rates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. The amounts included in the table below are in U.S. Dollars, unless noted ($ in millions):

			2005		2006		2007		2008		2009		Thereafter		Total	Fair Value
Long-term debt:
	Fixed rate (Euro)		624		6		742		2		833		2		2,209	2,323
		Average interest rate	4.4	%	3.7	%	6.1	%	7.5	%	5.5	%	8.1	%	—	—
	Fixed rate (Yen)		1		1		—		—		—		54		56	56
		Average interest rate	2.9	%	2.1	%	—		—		—		5.0	%	—	—
	Fixed rate (British Pound)		—		—		—		—		—		883		883	923
		Average interest rate	—		—		—		—		—		6.4	%	—	—
	Fixed rate (Other)		11		9		5		2		—		—		27	27
		Average interest rate	6.3	%	6.1	%	6.8	%	6.4	%	—		—		—	—
	Variable rate (Euro)		26		11		11		13		12		—		73	73
		Average interest rate(1)	3.4	%	3.4	%	3.6	%	3.7	%	3.7	%	—		—	—
	Variable rate (Other)		18		—		—		—		—		—		18	18
		Average interest rate(1)	11.4	%	—		—		—		—		—		—	—
Forward contracts:
	Pay US$/Receive Australian Dollar		154		—		—		—		—		—		154	2
		Average contractual exchange rate	0.71		—		—		—		—		—		—	—
	Pay US$/Receive Canadian Dollar		160		—		—		—		—		—		160	7
		Average contractual exchange rate	1.33		—		—		—		—		—		—	—
	Pay US$/Receive Swiss Franc		131		—		—		—		—		—		131	(2	)
		Average contractual exchange rate	1.24		—		—		—		—		—		—	—
	Pay Czech Republic Koruna/Receive US$		18		—		—		—		—		—		18	—
		Average contractual exchange rate	25.78		—		—		—		—		—		—	—
	Pay US$/Receive Danish Krona		14		—		—		—		—		—		14	—
		Average contractual exchange rate	6.05		—		—		—		—		—		—	—
	Pay Euro/Receive British Pound		31		—		—		—		—		—		31	—
		Average contractual exchange rate	0.69		—		—		—		—		—		—	—
	Pay US$/Receive Euro		1,395		—		—		—		—		—		1,395	3
		Average contractual exchange rate	1.23		—		—		—		—		—		—	—
	Pay US$/Receive British Pound		161		—		—		—		—		—		161	1
		Average contractual exchange rate	1.79		—		—		—		—		—		—	—
	Pay US$/Receive Hong Kong Dollar		124		—		—		—		—		—		124	—
		Average contractual exchange rate	7.78		—		—		—		—		—		—	—
	Pay US$/Receive Hungary Forint		12		—		—		—		—		—		12	—
		Average contractual exchange rate	204.18		—		—		—		—		—		—	—
	Pay Yen/Receive Euro		49		—		—		—		—		—		49	2
		Average contractual exchange rate	131.06		—		—		—		—		—		—	—
	Pay US$/Receive Yen		487		—		—		—		—		—		487	(9	)
		Average contractual exchange rate	108.91		—		—		—		—		—		—	—
	Pay US$/Receive Mexican Peso		83		—		—		—		—		—		83	1
		Average contractual exchange rate	11.63		—		—		—		—		—		—	—
	Pay US$/Receive Norwegian Krone		9		—		—		—		—		—		9	—
		Average contractual exchange rate	6.82		—		—		—		—		—		—	—
	Pay US$/Receive New Zealand Dollar		49		—		—		—		—		—		49	1
		Average contractual exchange rate	0.65		—		—		—		—		—		—	—
	Pay Polish Zloty/Receive Euro		5		—		—		—		—		—		5	—
		Average contractual exchange rate	4.61		—		—		—		—		—		—	—
	Pay US$/Receive Swedish Krona		27		—		—		—		—		—		27	1
		Average contractual exchange rate	7.57		—		—		—		—		—		—	—
	Pay US$/Receive Singapore Dollar		222		—		—		—		—		—		222	—
		Average contractual exchange rate	1.69		—		—		—		—		—		—	—
	Pay US$/Receive Taiwan Dollar		10		—		—		—		—		—		10	—
		Average contractual exchange rate	33.81		—		—		—		—		—		—	—
	Pay South African Rand/Receive Euro		5		—		—		—		—		—		5	—
		Average contractual exchange rate	8.00		—		—		—		—		—		—	—

⁽¹⁾

Weighted-average variable interest rates are based on applicable rates at September 30, 2004 per the terms of the contracts of the related financial instruments.

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        In addition to the forward foreign currency exchange contracts presented in the table above, the Company held forward contracts in 14 different currency pairs, with individual notional amounts of less than $5 million and an aggregate notional amount of $25 million and less than $1 million in fair value. These contracts primarily related to exposures against the Euro.

Item 8.    Financial Statements and Supplementary Data

        The following consolidated financial statements and schedule are filed as part of this Annual Report:

        Financial Statements:

Management's Responsibility for Financial Statements

Report of Independent Registered Public Accounting Firms

Consolidated Statements of Operations for the years ended September 30, 2004, 2003 and 2002

Consolidated Balance Sheets at September 30, 2004 and 2003

Consolidated Statements of Shareholders' Equity for the years ended September 30, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the years ended September 30, 2004, 2003 and 2002

Notes to Consolidated Financial Statements

        Financial Statement Schedule:

Schedule II—Valuation and Qualifying Accounts

        All other financial statements and schedules have been omitted since the information required to be submitted has been included in the consolidated financial statements and related notes or because they are either not applicable or not required under the rules of Regulation S-X.

        Information on quarterly results of operations is set forth in our financial statements under Notes to Consolidated Financial Statements, Note 26—Summarized Quarterly Financial Data—(Unaudited).

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        The information required by Regulation S-K, Item 304(a) has previously been reported by the Company. There have been no disagreements with our accountants, as defined in Regulation S-K, Item 304(b).

Item 9A.    Controls and Procedures

        On September 17, 2002 and December 30, 2002 we reported in Current Reports on Form 8-K the findings of outside counsel investigations that identified internal control weaknesses in our accounting and financial reporting. These findings have played a significant role in our efforts to strengthen our internal control environment in such areas as acquisition accounting, restructuring, financial and legal controls, reserve utilization, incentive compensation and a number of other areas relevant to our financial statements. Tyco's senior management and Board of Directors continue their comprehensive, diligent efforts in reviewing Tyco's internal controls and policies and procedures. These efforts have been enhanced and expanded as a result of our efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002 ("SOx 404"), which have not yet been completed. Although the framework has been

72

put in place to materially improve the control structure of Tyco, it will take some time to realize all of the benefits from our initiatives.

        Senior management is committed to continuing to improve our corporate governance and internal control over financial reporting. During 2003 and 2004, our Board of Directors and senior management initiated the following actions:

•

Created new Board and Board Committee charters;



•

Created a new employee Guide to Ethical Conduct, began a planned, targeted training on certain identified risk areas and conducted worldwide employee meetings to train employees;



•

Established company-wide compliance training;



•

Chartered a new Compliance Risk Committee;



•

Instituted detailed operating and strategy reviews with the Chief Executive Officer and Chief Financial Officer and each business segment;



•

Realigned reporting such that the business segment chief financial officers and general counsels report directly to our Chief Financial Officer and our General Counsel, respectively, and instituted similar reporting within each business segment;



•

Reviewed total incentive compensation spending with the Compensation and Human Resources Committee of the Board of Directors;



•

Created a detailed delegation of authority to govern, among other business processes, the expenditure or commitment of funds;



•

Developed a controllership guide to provide guidance on applying accounting principles generally accepted in the United States;



•

Required internal representation letters, similar to the certifications by our Chief Executive Officer and Chief Financial Officer, for key general manager and financial and legal executives;



•

Instituted a code of conduct for all financial executives;



•

Developed a corporate policy manual to provide broadly applicable and consistent direction on authority, procedures and accountability with respect to business operations;



•

Instituted an account reconciliation process to improve controls over core accounting records;



•

Created an Ombudsman office;



•

Conducted intensified internal audits, and detailed controls and operating reviews;



•

Developed treasury department policies and procedures and a related training program;



•

Conducted a thorough review of internal audit processes and procedures and expanded the resources and responsibilities of the internal audit function, including a senior internal audit officer who reports directly to the Audit Committee of the Board of Directors;



•

Created a disclosure committee that is comprised of a cross-functional team, including, but not limited to, senior personnel from the legal, finance, internal audit and corporate governance departments with responsibility for reviewing Tyco's periodic SEC filings for adequacy of disclosure and communicating material findings to the Company's Chief Executive Officer and Chief Financial Officer;



•

Hired a new Chief Accounting Officer;

73

•

Developed a formal fraud risk assessment process during the fourth quarter of 2004 that will be rolled out during 2005, whereby our finance and operational leaders will review their businesses for susceptibility to fraud and make appropriate changes to internal controls; and



•

During the fourth quarter of 2004, began implementing substantial changes to the tax reporting and compliance processes, including preparation of amended federal U.S. income tax returns, hiring and training of additional tax personnel and the completion of a comprehensive review, analysis and reconciliation of deferred tax assets and liabilities.

        In connection with our SOx 404 compliance efforts, we have invested significant resources in documenting, analyzing and testing our internal controls. As necessary, we have taken, and currently continue to take actions to remediate control gaps identified including additional information technology controls, improved segregation of duties, predominantly in our smaller entities, further formalization of our controllership guide, extensive training on generally accepted accounting principles and internal controls and enhanced monitoring controls. We are committed to ongoing assessments of our controls and their effectiveness, the results of which will be reported to our shareholders.

        Senior management believes based on its knowledge that the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report. We cannot provide assurance that new problems will not be found in the future. We do not expect that our disclosure controls and procedures, or our internal controls will prevent all errors and all fraud because no control system can provide absolute assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Tyco have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some person or by collusion of two or more people. We expect to continue to improve our controls with each passing quarter. Our Board of Directors and senior management are committed not only to a sound internal control environment but also to be recognized as a leader in corporate governance.

        As of the end of the period covered by this report, an evaluation was performed of the effectiveness of the design and operation of Tyco's disclosure controls and procedures by senior management. Based on that evaluation, Tyco's management, including the CEO and CFO, concluded that these disclosure procedures and controls are effective. Except as described above, there have been no significant changes in internal controls. Tyco will continue to make ongoing assessments of these controls and procedures.

Item 9B.    Other Information

        On December 9, 2004, the Company and Richard J. Meelia, President of Tyco Healthcare, agreed to amend the Retention Agreement, dated February 14, 2002, between the Company and Mr. Meelia to extend the expiration date of the voluntary termination provision set forth therein from June 1, 2005 to December 31, 2005.

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PART III

Item 10.    Directors and Executive Officers of the Registrant

        Information concerning Directors and Executive Officers may be found under the captions "Proposal Number One—Election of Directors," "—New Nominee for Director," "—Committees of the Board of Directors," "—Nomination of Directors," and "—Executive Officers" in our definitive proxy statement for our 2005 Annual General Meeting of Shareholders (the "2005 Proxy Statement"), which will be filed within the Commission within 120 days after the close of our fiscal year. Such information is incorporated herein by reference. The information in the 2005 Proxy Statement set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" is incorporated herein by reference.

Code of Ethics

        We have adopted the Tyco Guide to Ethical Conduct, which applies to all employees, officers and directors of Tyco. Our Guide to Ethical Conduct meets the requirements of a "code of ethics" as defined by Item 406 of Regulation S-K and applies to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as well as all other employees, as indicated above. Our Guide to Ethical Conduct also meets the requirements of a code of business conduct and ethics under the listing standards of the New York Stock Exchange, Inc. Our Guide to Ethical Conduct is posted on our website at www.tyco.com under the heading "Our Commitment—Governance." We will also provide a copy of our Guide to Ethical Conduct to shareholders upon request. We intend to disclose any amendments to our Guide of Ethical Conduct, as well as any waivers for executive officers or directors, on our website.

Item 11.    Executive Compensation

        Information concerning executive compensation may be found under the captions "Executive Officer Compensation," "Compensation of Non-Employee Directors," and "Compensation Committee Interlocks and Insider Participation" of our 2005 Proxy Statement. Such information is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

        The information in our 2005 Proxy Statement set forth under the captions "Executive Officer Compensation—Equity Compensation Plan Information" and "Security Ownership of Certain Beneficial Owners and Management" is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions

        The information in our 2005 Proxy Statement set forth under the caption "Certain Relationships and Related Transactions" is incorporated herein by reference.

Item 14.    Principal Accountant Fees and Services

        The information in our 2005 Proxy Statement set forth under the captions "Re-Appointment of Independent Auditors and Authorization of the Audit Committee to Set Their Compensation," "Audit and Non-Audit Fees" and "Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditor" is incorporated herein by reference.

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PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)

(1) and (2) Financial Statements and Schedules—See Item 8.



(3)

Exhibit Index:

Exhibit Number	Exhibit
3.1	Memorandum of Association (as altered) (Incorporating all amendments to July 2, 1997) (Incorporated by reference to the Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 filed on May 15, 2003 to make this exhibit electronically available because it was last filed with the Commission in paper format.)
3.2	Certificate of Incorporation (Incorporating all amendments to July 2, 1997) (Incorporated by reference to the Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 filed on May 15, 2003 to make this exhibit electronically available because it was last filed with the Commission in paper format.)
3.3	Amended and Restated Bye-Laws of Tyco International Ltd. (incorporating all amendments as of March 25, 2004). (Incorporated by reference to Annex A to the Registrant's Definitive Proxy Statement on Schedule 14A for the Annual General Meeting of Shareholders on March 25, 2004 filed on January 28, 2004).
4.1	Form of Indenture, dated as of June 9, 1998, among Tyco International Group S.A. ("TIGSA"), Tyco and The Bank of New York, as trustee (Incorporated by reference to an Exhibit to the Registrant's and TIGSA's Co-Registration Statement on Form S-3 filed on June 9, 1998).
4.2	Indenture by and among TIGSA, Tyco, and State Street Bank and Trust Company, as trustee, dated as of February 12, 2001 relating to Zero Coupon Convertible Debentures due 2021 (Incorporated by reference to an Exhibit to the Registrants' and TIGSA's Co-Registration Statement on Form S-3 filed March 16, 2001).
4.3	Indenture between Tyco and State Street Bank and Trust Company, as trustee, dated as of November 17, 2000 relating to Zero Coupon Convertible Debentures due 2020 (Incorporated by reference to the Registrant's Registration Statement on Form S-3 filed on December 8, 2000).
4.4	Indenture by and among TIGSA and U.S. Bank, N.A., as trustee, dated as of January 13, 2003 relating to Series A 2.75% Convertible Senior Debentures due 2018 and Series B 3.125% Convertible Senior Debentures due 2023 (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2002 filed on February 14, 2003).
4.5	Supplemental Indenture No. 1, dated January 10, 2003, by and among TIGSA, Tyco International Ltd. and U.S. Bank, N.A. (Incorporated by reference to the Registrants' and TIGSA's Schedule TO filed on January 14, 2003).
10.1	The Tyco International Ltd. Long Term Incentive Plan (formerly known as the ADT 1993 Long-Term Incentive Plan) (as amended May 12, 1999) (Incorporated by reference to the Registrant's Form S-8 filed on June 10, 1999).(1)
10.2	1994 Restricted Stock Ownership Plan for Key Employees (Incorporated by reference to the Registrant's Registration Statement on Form S-8 filed on December 21, 1999).(1)

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10.3	Tyco International (US) Inc. Supplemental Executive Retirement Plan, amended and restated as of October 1, 2000, dated December 30, 2000 (Filed herewith).(1)
10.4	Second Amendment to Tyco International (US) Inc. Supplemental Executive Retirement Plan, dated February 14, 2002 (Filed herewith).(1)
10.5	Third Amendment to Tyco International (US) Inc. Supplemental Executive Retirement Plan, dated July 30, 2002 (Filed herewith).(1)
10.6	Amendments to the Tyco International Ltd. Supplemental Executive Retirement Plan, dated December 24, 2003 (Filed herewith).(1)(2)
10.7	December 2003 Amendment to Tyco International (US) Inc. Supplemental Executive Retirement Plan, dated December 24, 2003 (Filed herewith).(1)
10.8	Amendment No. 2004-1 to the Tyco International (US) Inc. Supplemental Executive Retirement Plan, dated April 30, 2004 (Filed herewith).(1)
10.9	The Tyco International Ltd. Long Term Incentive Plan II (Incorporated by reference to the Registrant's Registration Statement on Form S-8 filed March 25, 1999).(1)
10.10	Retention Agreement for L. Dennis Kozlowski dated January 22, 2001 and Amendment thereto dated August 1, 2001 (Incorporated by reference to an Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).(1)
10.11	Retention Agreement for Mark H. Swartz dated January 22, 2001 and Amendment thereto dated August 1, 2001 (Incorporated by reference to an Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).(1)
10.12	Retention Agreement for Richard J. Meelia dated February 14, 2002 (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2001).(1)
10.13	Retention Agreement for Mark A. Belnick dated February 28, 2002 (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002).(1)
10.14	Edward D. Breen Employment Contract dated July 25, 2002 (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002).(1)
10.15	Memo Summarizing Mark H. Swartz's Severance Arrangement (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period quarter ended June 30, 2002).(1)
10.16	David J. FitzPatrick Employment Contract dated September 18, 2002 (Incorporated by reference to an Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2002 filed on December 30, 2002).(1)
10.17	First Amendment to the Executive Employment Agreement, dated as of September 18, 2004, by and between David J. FitzPatrick and Tyco International Ltd. (Filed herewith).(1)
10.18	William B. Lytton Employment Contract dated September 30, 2002 (Incorporated by reference to an Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2002 filed on December 30, 2002).(1)

77

10.19	First Amendment to the Executive Employment Agreement, dated as of September 30, 2004, by and between William B. Lytton and Tyco International Ltd (Filed herewith).(1)
10.20	Tyco International Ltd. UK Savings Related Share Option Plan (Incorporated by reference to an Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2002 filed on December 30, 2002).(1)
10.21	Tyco Employee Stock Purchase Plan, as amended May 2003 (Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-8 dated July 30, 2003).(1)
10.22	Tyco International (Ireland) Employee Share Scheme (Incorporated by reference to an Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2002 filed on December 30, 2002).(1)
10.23	Tyco International (US) Inc. Deferred Compensation Plan, as amended through June 2002. (Incorporated by reference to the Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 filed on May 15, 2003).(1)
10.24	Juergen Gromer Employment Contract effective October 1, 1999 and executed on June 19, 2000. (Incorporated by reference to the Exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 2003 filed on December 17, 2003).(1)
10.25	Tyco International Ltd. 2004 Stock and Incentive Plan (Incorporated by reference to Appendix A to the Registrant's Proxy Statement for the fiscal year ended September 30, 2003 filed on January 28, 2004).(1)
10.26	Amendment to Tyco International Ltd. 2004 Stock and Incentive Plan, effective as of October 1, 2004 (Filed herewith).(1)
10.27	Terms and Conditions of Option Award, Restricted Stock Award, and Restricted Unit Award and Form of Director Deferred Stock Unit Award Letter under the 2004 Stock and Incentive Plan (Filed herewith).(1)
10.28	Tyco International (US) Inc. Severance Plan for U.S. Officers and Executives (Filed herewith).(1)
10.29	364-Day Credit Agreement dated as of December 22, 2003 among Tyco International Group S.A., Tyco International Ltd., the banks named therein, Bank of America, N.A. and Citigroup North America, as Co-Administrative Agents (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2003).
10.30	Three-Year Credit Agreement dated as of December 22, 2003 among Tyco International Group S.A., Tyco International Ltd., the banks named therein, Bank of America, N.A. and Citigroup North America, as Co-Administrative Agents (Incorporated by reference to an Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2003).
10.31	Amendment to Retention Agreement dated as of December 9, 2004, by and between Tyco International Ltd. and Richard J. Meelia (Filed herewith).(1)
21.1	Subsidiaries of the registrant (Filed herewith).
23.1	Consent of Deloitte and Touche LLP (Filed herewith).
23.2	Consent of PricewaterhouseCoopers LLP (Filed herewith).

78

24.1	Power of Attorney (Filed herewith).
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).
32.1	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith).

⁽¹⁾

Management contract or compensatory plan.

⁽²⁾

In July 1997, a wholly-owned subsidiary of what was formerly called ADT Limited ("ADT") merged with Tyco International Ltd., a Massachusetts Corporation at the time ("Former Tyco"). Upon consummation of the merger, ADT (the continuing public company) changed its name to Tyco International Ltd. ("Tyco"). Former Tyco became a wholly-owned subsidiary of Tyco and changed its name to Tyco International (US) Inc.

(b)

See Item 15(a)(3) above.

(c)

See Item 15(a)(2) above.

79

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TYCO INTERNATIONAL LTD.
By:	/s/  DAVID J. FITZPATRICK David J. FitzPatrick Executive Vice President and Chief Financial Officer

Date: December 13, 2004

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant on December 13, 2004 in the capacities indicated below.

Name	Title
/s/  EDWARD D. BREEN Edward D. Breen	Chairman, Chief Executive Officer and Director (Principal Executive Officer)
/s/  DAVID J. FITZPATRICK David J. FitzPatrick	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
/s/  CAROL ANTHONY DAVIDSON Carol Anthony Davidson	Senior Vice President and Controller (Principal Accounting Officer)
* Adm. Dennis C. Blair	Director
* George W. Buckley	Director
* Brian Duperreault	Director
* Bruce S. Gordon	Director
* John A. Krol	Director
* H. Carl McCall	Director
* Mackey J. McDonald	Director
* Dr. Brendan R. O'Neill	Director
* Sandra S. Wijnberg	Director
* Jerome B. York	Director

* William B. Lytton, by signing his name hereto, does sign this document on behalf of the above noted individuals, pursuant to powers of attorney duly executed by such individuals, which have been filed as Exhibit 24.1 to this Report.

By:
/s/  WILLIAM B. LYTTON William B. Lytton
Attorney-in-fact

80

TYCO INTERNATIONAL LTD.
Index to Consolidated Financial Information

	Page
Management's Responsibility for Financial Statements	82
Reports of Independent Registered Public Accounting Firms	83
Consolidated Statements of Operations	85
Consolidated Balance Sheets	86
Consolidated Statements of Shareholders' Equity	87
Consolidated Statements of Cash Flows	88
Notes to Consolidated Financial Statements	89
Schedule II—Valuation and Qualifying Accounts	160

81

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

Discussion of Management's Responsibility

        We are responsible for the preparation, integrity and fair presentation of the consolidated financial statements and related information appearing in this report. We take these responsibilities very seriously and are committed to being recognized as a leader in governance, controls, clarity and transparency of financial statements. We are committed to making honesty, integrity and transparency the hallmarks of how we run Tyco. We believe that to succeed in today's environment requires more than just compliance with laws and regulations—it requires a culture based upon the highest levels of integrity and ethical values. Expected behavior starts with our Board of Directors and our senior team leading by example and includes every one of Tyco's 258,400 global employees, as well as our customers, suppliers and business partners. One of our most crucial objectives is continuing to restore public, employee and shareholder confidence in Tyco. We believe this is being accomplished; first, by issuing financial information and related disclosures that are accurate, complete and transparent so investors are well informed; second, by supporting a leadership culture based on an ethic of uncompromising integrity and accountability; and third, by recruiting, training and retaining high-performance individuals who have the highest ethical standards. We take full responsibility for meeting this objective, adopting appropriate accounting standards, designing and maintaining adequate systems of internal and disclosure controls and devoting our full commitment and the necessary resources to these items.

Dedication to Governance, Controls and Financial Reporting

        Throughout 2004, we continued to make significant progress designing, maintaining and monitoring internal controls over financial reporting and disclosures and improving our corporate governance practices, many of which are discussed in this Annual Report on Form 10-K. We believe that a strong control environment is a dynamic process. Therefore, we intend to continue to devote substantial resources to document, assess and improve our internal controls and corporate governance, and we believe that the controls currently in place provide reasonable assurance that our assets are safeguarded, transactions are in accordance with authorizations and that financial records are reliable for our financial statements.

        We are pleased with our corporate governance and control improvements; however, we still have more to accomplish in a dynamic and quite complex environment before we are fully confident that we have in place all of the rigorous and effective controls that we and our Board of Directors desire.

        Our Audit Committee meets regularly and separately with management, Deloitte & Touche LLP, our independent auditors, and our internal auditors to discuss financial reports, controls and auditing.

        We, our Board and our Audit Committee are all committed to excellence in governance, financial reporting and controls.

/s/  EDWARD D. BREEN Edward D. Breen
Chairman and Chief Executive Officer /s/  DAVID J. FITZPATRICK David J. FitzPatrick
Executive Vice President and
Chief Financial Officer

82

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Tyco International Ltd.

We have audited the accompanying consolidated balance sheet of Tyco International Ltd. and subsidiaries (the "Company") as of September 30, 2004, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended. Our audit also included the financial statement schedule for the year ended September 30, 2004, listed in the Index at Item 15a. These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2004 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2004, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/  DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

New York, New York
December 13, 2004

83

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
and Shareholders of Tyco International Ltd.

        In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Tyco International Ltd. and its subsidiaries at September 30, 2003, and the results of their operations and their cash flows for each of the two years in the period ended September 30, 2003, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for each of the two years in the period ended September 30, 2003 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        As discussed in Notes 9 and 13, the Company adopted provisions of Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, in fiscal year 2003 and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, in fiscal year 2002.

/S/ PRICEWATERHOUSECOOPERS LLP

PRICEWATERHOUSECOOPERS LLP
New York, New York
November 4, 2003
(except as to the amounts impacted by discontinued
operations as disclosed in Note 4, for which the
date is December 10, 2004.)

84

TYCO INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended September 30, 2004, 2003 and 2002
(in millions, except per share data)

			2004			2003			2002
Revenue from product sales			$	32,079		$	28,844		$	28,187
Service revenue				8,074			7,143			6,637
		Net revenue		40,153			35,987			34,824
Cost of product sales				20,934			19,212			19,008
Cost of services				4,717			3,968			3,384
Selling, general and administrative expenses				8,721			8,719			8,111
Restructuring and other charges (credits), net				249			(74	)		1,121
Impairment of long-lived assets				99			825			3,310
Losses and impairments on divestitures, net				116			—			—
Goodwill impairment				—			278			1,344
Write-off of purchased in-process research and development				—			—			18
		Operating income (loss)		5,317			3,059			(1,472	)
Interest income				91			107			117
Interest expense				(963	)		(1,148	)		(1,076	)
Other expense, net				(286	)		(223	)		(217	)
		Income (loss) from continuing operations before income taxes and minority interest		4,159			1,795			(2,648	)
Income taxes				(1,140	)		(757	)		(202	)
Minority interest				(14	)		(3	)		(1	)
		Income (loss) from continuing operations		3,005			1,035			(2,851	)
Discontinued operations:
	(Loss) income from discontinued operations, net of income taxes			(3	)		20			(6,270	)
	Loss on sale of discontinued operations, net of income taxes			(123	)		—			(59	)
		Income (loss) before cumulative effect of accounting change		2,879			1,055			(9,180	)
Cumulative effect of accounting change, net of income taxes				—			(75	)		—
		Net income (loss)	$	2,879		$	980		$	(9,180	)
Basic earnings (loss) per share:
	Income (loss) from continuing operations		$	1.50		$	0.52		$	(1.43	)
	Income (loss) from discontinued operations			—			0.01			(3.15	)
	Loss on sale of discontinued operations			(0.06	)		—			(0.03	)
	Income (loss) before cumulative effect of accounting change			1.44			0.53			(4.62	)
	Cumulative effect of accounting change			—			(0.04	)		—
	Net income (loss)			1.44			0.49			(4.62	)
Diluted earnings (loss) per share:
	Income (loss) from continuing operations		$	1.41		$	0.52		$	(1.43	)
	Income (loss) from discontinued operations			—			0.01			(3.15	)
	Loss on sale of discontinued operations			(0.06	)		—			(0.03	)
	Income (loss) before cumulative effect of accounting change			1.35			0.53			(4.62	)
	Cumulative effect of accounting change			—			(0.04	)		—
	Net income (loss)			1.35			0.49			(4.62	)
Weighted-average number of shares outstanding:
	Basic			2,001			1,995			1,989
	Diluted			2,216			2,003			1,989

See Notes to Consolidated Financial Statements.

85

TYCO INTERNATIONAL LTD.

CONSOLIDATED BALANCE SHEETS

As of September 30, 2004 and 2003
(in millions, except share data)

			2004		2003
Assets
Current Assets:
	Cash and cash equivalents		$	4,467	$	4,186
	Accounts receivable, less allowance for doubtful accounts of $524 and $719, respectively			6,463		5,555
	Inventories			4,365		4,232
	Prepaid expenses and other current assets			1,594		2,131
	Deferred income taxes			1,041		795
	Assets held for sale			615		489
		Total current assets		18,545		17,388
Property, plant and equipment, net				9,635		10,178
Goodwill				25,510		25,528
Intangible assets, net				5,335		5,779
Other assets				4,642		4,124
		Total Assets	$	63,667	$	62,997
Liabilities and Shareholders' Equity
Current Liabilities:
	Loans payable and current maturities of long-term debt		$	2,116	$	2,714
	Accounts payable			2,698		2,598
	Accrued and other current liabilities			5,086		4,509
	Deferred revenue			729		809
	Liabilities held for sale			523		192
		Total current liabilities		11,152		10,822
Long-term debt				14,617		18,251
Other liabilities				7,538		7,442
		Total Liabilities		33,307		36,515
Commitments and contingencies (Note 18)
Minority interest				68		113
Shareholders' Equity:
	Preference shares, $1 par value, 125,000,000 shares authorized, none and one share outstanding, respectively			—		—
	Common shares, $0.20 par value, 4,000,000,000 shares authorized; 2,009,867,009 and 1,998,189,621 shares outstanding, net of 12,864,837 and 21,144,265 shares owned by subsidiaries, respectively			402		400
	Capital in excess:
		Share premium		8,315		8,161
		Contributed surplus, net		15,319		15,120
	Accumulated earnings			5,740		2,961
	Accumulated other comprehensive income (loss)			516		(273	)
		Total Shareholders' Equity		30,292		26,369
		Total Liabilities and Shareholders' Equity	$	63,667	$	62,997

See Notes to Consolidated Financial Statements.

86

TYCO INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years Ended September 30, 2004, 2003 and 2002
(in millions)

		Number of Common Shares		Common Shares $0.20 Par Value			Share Premium		Contributed Surplus			Accumulated Earnings			Accumulated Other Comprehensive (Loss) Income			Total
Balance at September 30, 2001		1,935		$	387		$	7,963	$	12,797		$	11,361		$	(1,427	)	$	31,081
Comprehensive loss:
	Net loss												(9,180	)					(9,180	)
	Currency translation															105			105
	Unrealized gain on marketable securities															74			74
	Unrealized gain on derivative instruments															65			65
	Minimum pension liability															(406	)		(406	)
	Total comprehensive loss																	$	(9,342	)
Dividends declared													(100	)					(100	)
Restricted share grants, net of forfeitures		2								3									3
Share options exercised, including tax benefit of $54		8			2			184		54									240
Repurchase of common shares by subsidiary		(16	)		(3	)				(786	)								(789	)
Compensation expense										93									93
Issuance of common shares and options for acquisitions		66			13					2,876									2,889
Exchange of convertible debt due 2010		1								6									6
Balance at September 30, 2002		1,996			399			8,147		15,043			2,081			(1,589	)		24,081
Comprehensive income:
	Net income												980						980
	Currency translation															1,446			1,446
	Unrealized gain on marketable securities															2			2
	Unrealized gain on derivative instruments															3			3
	Minimum pension liability															(135	)		(135	)
	Total comprehensive income																	$	2,296
Dividends declared													(100	)					(100	)
Restricted share grants, net of forfeitures		1
Share options exercised, including tax benefit of $37		1			1			14		37									52
Repurchase of common shares by subsidiary										(1	)								(1	)
Compensation expense										38									38
Expiration of pre-existing put option rights assumed in acquisition										3									3
Balance at September 30, 2003		1,998			400			8,161		15,120			2,961			(273	)		26,369
Comprehensive income:
	Net income												2,879						2,879
	Currency translation															704			704
	Unrealized gain on marketable securities															3			3
	Unrealized loss on derivative instruments															(4	)		(4	)
	Minimum pension liability															86			86
	Total comprehensive income																	$	3,668
Dividends declared													(100	)					(100	)
Restricted share grants, net of forfeitures		3			1					(1	)								—
Share options exercised, including tax benefit of $158		8			1			154		158									313
Repurchase of common shares by subsidiary										(1	)								(1	)
Compensation expense										37									37
Exchange of convertible debt due 2010		1			—					6									6
Balance at September 30, 2004		2,010		$	402		$	8,315	$	15,319		$	5,740		$	516		$	30,292

See Notes to Consolidated Financial Statements.

87

TYCO INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended September 30, 2004, 2003 and 2002
(in millions)

				2004			2003			2002
Cash Flows From Operating Activities:
Net income (loss)				$	2,879		$	980		$	(9,180	)
	Loss (income) from discontinued operations, net				126			(20	)		6,329
	Cumulative effect of accounting change, net				—			75			—
Income (loss) from continuing operations					3,005			1,035			(2,851	)
Adjustments to reconcile net cash provided by operating activities:
	Non-cash restructuring and other (credits) charges, net				(30	)		(46	)		796
	Impairment of long-lived assets				99			825			3,310
	Non-cash losses (gains) and impairments on divestitures, net				111			—			(24	)
	Goodwill impairment				—			278			1,344
	Write-off of purchased in-process research and development				—			—			18
	Loss on investments				1			87			271
	Depreciation and amortization				2,176			2,183			2,073
	Deferred income taxes				172			357			(578	)
	Provision for losses on accounts receivable and inventory				321			580			499
	Debt and refinancing cost amortization				55			116			194
	Loss (gain) on the retirement of debt				284			128			(33	)
	Other non-cash items				96			111			92
	Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
		Accounts receivable, net			(153	)		309			1,063
		Decrease in sale of accounts receivable			(929	)		(119	)		(56	)
		Contracts in progress			16			(87	)		(335	)
		Inventories			(225	)		418			(41	)
		Other current assets			57			(25	)		(51	)
		Accounts payable			76			(623	)		(832	)
		Accrued and other liabilities			(120	)		(578	)		215
		Income taxes			406			201			334
		Other			(34	)		159			15
			Net cash provided by operating activities		5,384			5,309			5,423
Cash Flows From Investing Activities:
Capital expenditures, net					(1,015	)		(1,274	)		(2,823	)
Acquisition of customer accounts (ADT dealer program)					(254	)		(597	)		(1,138	)
Acquisition of businesses, net of cash acquired					(15	)		(44	)		(1,684	)
Cash paid for purchase accounting and holdback/earn-out liabilities					(107	)		(272	)		(625	)
Net proceeds from the sale of CIT					—			—			4,395
Divestiture of businesses, net of cash retained by businesses sold					236			9			139
Decrease (increase) in investments					423			(383	)		(17	)
Decrease (increase) in restricted cash					342			(228	)		(196	)
Other					(25	)		58			(95	)
			Net cash used in investing activities		(415	)		(2,731	)		(2,044	)
Cash Flows From Financing Activities:
Net (repayment of) proceeds from short-term debt					(2,651	)		(7,907	)		2,065
Proceeds from issuance of long-term debt					2,224			4,388			5,417
Repayment of long-term debt, including debt tenders					(4,345	)		(1,098	)		(5,531	)
Proceeds from exercise of share options					155			15			186
Dividends paid					(100	)		(101	)		(100	)
Repurchase of common shares					(1	)		(1	)		(789	)
Capital contributions to Tyco Capital					—			—			(200	)
Other					(24	)		(8	)		(10	)
			Net cash (used in) provided by financing activities		(4,742	)		(4,712	)		1,038
Effect of currency translation on cash					45			89			2
Effect of discontinued operations on cash					9			53			(21	)
Net increase (decrease) in cash and cash equivalents					281			(1,992	)		4,398
Cash and cash equivalents at beginning of year					4,186			6,178			1,780
Cash and cash equivalents at end of year				$	4,467		$	4,186		$	6,178
Supplementary Cash Flow Information:
Interest paid				$	982		$	1,143		$	944
Income taxes paid, net of refunds					550			608			668

See Notes to Consolidated Financial Statements.

88

TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation—The Consolidated Financial Statements include the consolidated accounts of Tyco International Ltd., a company organized under the laws of Bermuda, and its subsidiaries (Tyco and all its subsidiaries, hereinafter collectively referred to as the "Company" or "Tyco") and have been prepared in United States Dollars, and in accordance with Generally Accepted Accounting Principles in the United States ("GAAP").

Principles of Consolidation—Tyco is a holding company which conducts its business through its operating subsidiaries. The Company is a global, diversified company that provides products and services in five business segments: Fire and Security, Electronics, Healthcare, Engineered Products and Services and Plastics and Adhesives (see Note 23). The Company consolidates companies in which it owns or controls more than fifty percent of the voting shares unless control is likely to be temporary. Also, the Company consolidates variable interest entities in which the Company bears a majority of the risk to the entities' potential losses or stands to gain from a majority of the entities' expected returns. All significant intercompany transactions have been eliminated. While the Company presents its results of operations as of a September 30 year end, certain subsidiaries consistently close their books up to one month prior to that closing date. The results of companies acquired or disposed of during the year are included in the Consolidated Financial Statements from the effective date of acquisition or up to the date of disposal. All significant intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition—The Company recognizes revenue principally on four types of transactions—sales of products, sales of security systems, subscriber billings for monitoring services and contract sales.

        Revenue from the sales of products is recognized at the time title and risks and rewards of ownership pass. This is generally when the products reach the free-on-board shipping point, the sales price is fixed and determinable and collection is reasonable assured.

        Provisions for certain rebates, sales incentives, trade promotions, coupons, product returns and discounts to customers are accounted for as reductions in determining sales in the same period the related sales are recorded. These provisions are based on estimates derived from current program requirements and historical experience.

        Sales of security monitoring systems include multiple components including installation. Amounts assigned to each component are based on that component's objectively determined fair value. If fair value cannot be objectively determined for a sale involving multiple elements, the Company recognizes the revenue from installation of services, along with the associated direct incremental costs, over the contract life.

        Revenue from the sale of services is recognized as services are rendered. Subscriber billings for services not yet rendered are deferred and recognized as revenue as the services are rendered, and the associated deferred revenue is included in current liabilities or long-term liabilities, as appropriate.

        Contract sales for the installation of fire protection systems, undersea fiber optic cable systems and other construction related projects are recorded primarily on the percentage-of-completion method. Profits recognized on contracts in process are based upon estimated contract revenue and related cost to completion. Cost to completion is measured based on the ratio of actual cost incurred to total estimated cost. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the current period. Provisions for anticipated losses are made in the period in which they first become determinable.

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        In providing services under certain contracts, Infrastructure Services (a business unit within Engineered Products and Services) incurs sub-contract and other costs that are paid by Infrastructure Services and re-billed to their customers. These costs have historically been treated as "pass through" and were therefore not included in reported revenue and cost of revenue of Infrastructure Services. Effective January 1, 2004, retroactive to October 1, 2003, the Company began reflecting these sub-contract costs in both revenue and cost of revenue for Infrastructure Services, resulting in incremental revenue and cost of revenue of $739 million for the year ended September 30, 2004. The Company has not adjusted revenue or cost of revenue for the years ended September 30, 2003 and 2002 as such change was not material. Further, such adjustment would have no impact on previously reported operating income, net income (loss) or cash flow.

        Certain of the Company's long-term contracts have warranty obligations. Estimated warranty costs for each contract are determined based on the contract terms and technology specific issues. These costs are included in total estimated contract costs accrued over the construction period of the respective contracts under percentage-of-completion accounting.

        The Company's global undersea fiber optic network, on which it sells bandwidth capacity, is known as the Tyco Global Network ("TGN"). The Company's sales of bandwidth capacity are generally structured as either service arrangements or operating leases. The Company recognizes revenue associated with the service arrangement ratably over the service period and recognizes revenue associated with the operating leases over the lease term. The Company plans to sell the TGN (see Note 28).

        At September 30, 2004 and 2003, accounts receivable and other long-term receivables included retainage provisions of $86 million and $122 million, respectively, of which $34 million and $54 million are unbilled, respectively. These retainage provisions consist primarily of electronics contracts, fire protection contracts as well as transportation, water and environmental-related contracts and become due upon contract completion and acceptance. At September 30, 2004 the retainage provision included $57 million, which is expected to be collected during 2005. In addition, at September 30, 2004 and 2003, $48 million and $47 million, respectively, of accounts receivable were unbilled related to long-term contracts.

Research and Development—Research and development expenditures are expensed when incurred and are included in cost of sales. Customer-funded research and development are costs incurred by Tyco that are reimbursed by customers. There is no net impact on research and development expense on the Consolidated Statements of Operations for customer-funded research and development. Research and development expense in our Consolidated Statements of Operations reflects company-sponsored research and development only.

Advertising—Advertising costs are expensed when incurred and are included in selling, general and administrative expenses.

Employee Share Option Plans—Tyco measures compensation cost in connection with employee share option plans using the intrinsic value method and accordingly does not recognize compensation expense for the issuance of options with an exercise price equal to or greater than the market price at the date of grant. Had the fair value based method been applied by Tyco, using the Black-Scholes option pricing model and the assumptions set forth in Note 21, the effect on net income (loss) and

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earnings (loss) per share for the years ended September 30, 2004, 2003 and 2002 would have been as follows ($ in millions, except per share data):

		2004			2003			2002
Net income (loss), as reported		$	2,879		$	980		$	(9,180	)
Add: Employee compensation expense for share options included in reported net income, net of income taxes			7			8			—
Less: Total employee compensation expense for share options determined under fair value method, net of income taxes			(225	)		(321	)		(415	)
Net income (loss), pro forma		$	2,661		$	667		$	(9,595	)
Earnings (loss) per share:
	Basic—as reported	$	1.44		$	0.49		$	(4.62	)
	Basic—pro forma		1.33			0.33			(4.83	)
	Diluted—as reported		1.35			0.49			(4.62	)
	Diluted—pro forma		1.26			0.33			(4.83	)

Translation of Foreign Currency—For the Company's non-U.S. subsidiaries that account in a functional currency other than U.S. Dollars and do not operate in highly inflationary environments, assets and liabilities are translated into U.S. Dollars using year-end exchange rates. Revenue and expenses are translated at the average exchange rates in effect during the year. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive income (loss) within shareholders' equity. For subsidiaries operating in highly inflationary environments, inventories and property, plant and equipment, including related expenses, are translated at the rate of exchange in effect on the date the assets were acquired, while other assets and liabilities are translated at year-end exchange rates. Translation adjustments for the assets and liabilities of these subsidiaries are included in net income.

        Gains and losses resulting from foreign currency transactions, the amounts of which are not material in any period presented, are included in net income.

Cash and Cash Equivalents—All highly liquid investments purchased with maturity of three months or less from the time of purchase are considered to be cash equivalents.

        On occasion, the Company is required to post cash collateral to secure reimbursements or indemnity obligations under letters of credit and performance guarantees in respect of various construction projects. The amount of restricted cash in collateral was $84 million (of which $30 million is included in current assets and $54 million is included in long-term assets) and $445 million (of which $142 million is included in current assets and $303 million is included in long-term assets) at September 30, 2004 and 2003, respectively.

Allowance for Doubtful Accounts—The allowance for doubtful accounts receivable reflects the best estimate of probable losses inherent in Tyco's receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence.

Inventories—Inventories are recorded at the lower of cost (primarily first-in, first-out) or market value.

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Property, Plant and Equipment, Net—Property, plant and equipment, net is recorded at cost less accumulated depreciation. Depreciation expense for the years ended September 30, 2004, 2003 and 2002 was $1,478 million, $1,459 million and $1,454 million, respectively. Maintenance and repair expenditures are charged to expense when incurred. For the years ended September 30, 2004, 2003 and 2002, the Company capitalized interest of $2 million, $25 million and $100 million, respectively. The high level of capitalized interest in 2002 is due to the construction of the TGN. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows:

Buildings and related improvements	5 to 50 years
Leasehold improvements	Remaining term of the lease
Subscriber systems	10 to 14 years
Other machinery, equipment and furniture and fixtures	2 to 20 years

        The Company generally considers its electronic security assets in three asset pools: internally generated residential systems, internally generated commercial systems and customer accounts acquired through the ADT dealer program. Subscriber systems represent internally generated residential systems and internally generated commercial systems (customer accounts acquired through the ADT dealer program are recorded as intangible assets). For internal purposes, the Company considers internally generated commercial accounts in three smaller groups consisting of small business, core commercial and national commercial accounts. The internally generated residential and commercial account pools are generally amortized using the straight-line method over a ten-year period (a fourteen-year period is used for national commercial accounts and a fourteen-year period with write-off of specific accounts upon discontinuance is used for residential and commercial accounts in certain non-U.S. geographic locations).

Long-Lived Assets—The Company periodically evaluates the net realizable value of long-lived assets, including property, plant and equipment and amortizable intangible assets, relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. When indicators of potential impairment are present, the carrying values of the assets are evaluated in relation to the operating performance and estimated future undiscounted cash flows of the underlying business. An impairment in the carrying value of an asset is recognized whenever anticipated future cash flows (undiscounted) from an asset are estimated to be less than its carrying value. The net book value of an asset is adjusted to fair value if its expected future undiscounted cash flows are less than book value. The amount of the impairment recognized is the difference between the carrying value of the asset and its fair value. Fair values are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

Goodwill—Effective October 1, 2001, the beginning of Tyco's fiscal year 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," under which goodwill is no longer amortized but instead is assessed for impairment at least annually and as triggering events occur. In making this assessment, management relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and transactions and market place data. There are inherent uncertainties related to these factors and management's judgment in applying them to the analysis of goodwill impairment.

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        The Company has elected to make July 1 the annual impairment assessment date for all reporting units. SFAS No. 142 defines a reporting unit as an operating segment or one level below an operating segment. Our reporting units as of September 30, 2004 were as follows: Electronic Security Services, Fire Protection Contracting and Services, Electronic Components, Wireless, Electrical Contracting Services, Power Systems, Printed Circuit Group, Submarine Telecommunications, Medical Devices & Supplies, Retail, Pharmaceuticals, Flow Control and Fire Products, Electrical and Metal Products, Infrastructure Services, Plastics, A&E Products, Adhesives and Ludlow Coated Products. When changes occur in the composition of one or more segments or reporting units, the goodwill is reassigned to the segments or reporting units affected based on their relative fair value as prescribed by SFAS No. 142.

        Goodwill valuations have been calculated using an income approach based on the present value of future cash flows of each reporting unit. This approach incorporates many assumptions including future growth rates, discount factors and income tax rates. Changes in economic and operating conditions impacting these assumptions could result in a goodwill impairment in future periods.

        Disruptions to the business such as end market conditions and protracted economic weakness, unexpected significant declines in operating results of reporting units, the divestiture of a significant component of a reporting unit, and market capitalization declines may result in our having to perform a SFAS No. 142 first step valuation analysis for some or all of Tyco's reporting units prior to the required annual assessment. These types of events and the resulting analysis could result in additional charges for goodwill and other asset impairments in the future.

        See Note 13 for more information on SFAS No. 142 and Note 4 for further information regarding the impairment of goodwill relating to Tyco Capital.

Intangible Assets, Net—Intangible assets primarily include contracts and related customer relationships, and intellectual property. Certain contracts and related customer relationships result from purchasing residential security monitoring contracts from an external network of independent dealers who operate under the ADT dealer program. Acquired contracts and related customer relationships are recorded at their contractually determined purchase price. In those instances where the Company incurs costs associated with maintaining and operating its ADT dealer program, including brand advertising and due diligence. In certain programs, dealers pay the Company a non-refundable amount for each of the contracts sold to the Company. This non-refundable charge represents dealer reimbursement to the Company for costs incurred by the Company associated with maintaining and operating the ADT dealer program. Accordingly, each acquired contract and related customer relationship was recorded at its contractually determined purchase price, net of a non-refundable amount charged to dealers at the time the contract was accepted for purchase.

        During the first six months (twelve months in certain circumstances) after the purchase of the customer contract, any cancellation of monitoring service, including those that result from customer payment delinquencies, results in a chargeback by the Company to the dealer for the full amount of the contract purchase price. The non-refundable charge to the dealer is retained by the Company even in the event of customer cancellation. The Company records the amount charged back to the dealer as a reduction of the previously recorded intangible asset.

        Intangible assets arising from the ADT dealer program described above are amortized in pools determined by the month of contract acquisition on an accelerated basis over the period and pattern of economic benefit that is expected to be obtained from the customer relationship. Based upon attrition

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studies of the ADT dealer program customer base, conducted by an independent appraiser, the Company believes that the accelerated method that presently best achieves the matching objective above is the double-declining balance method based on a ten-year life for the first eight years of the estimated life of the customer relationship, converting to the straight-line method of amortization for the remaining four years of the estimated relationship period. Actual attrition data is regularly reviewed in order to assess the continued applicability of the accelerated method of amortization described above.

        Other contracts and related customer relationships, as well as intellectual property consisting primarily of patents, trademarks and unpatented technology, are being amortized on a straight-line basis over five to forty years. The Company evaluates the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life. In addition, intangible assets that are not subject to amortization are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Investments—The Company invests in equity and debt securities. Long-term investments in marketable equity securities that represent less than twenty percent ownership are marked to market at the end of each accounting period. Unrealized gains and losses are credited or charged to other comprehensive income within shareholders' equity for available for sale securities unless an unrealized loss is deemed to be other than temporary, in which case such loss is charged to earnings. Management determines the proper classification of investments in debt obligations with fixed maturities and equity securities for which there is a readily determinable market value at the time of purchase and reevaluates such classifications as of each balance sheet date. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the Consolidated Statements of Operations.

        Other equity investments for which the Company does not have the ability to exercise significant influence and for which there is not a readily determinable market value are accounted for under the cost method of accounting. The Company periodically evaluates the carrying value of its investments accounted for under the cost method of accounting, such that they are recorded at the lower of cost or estimated net realizable value.

        For equity investments in which the Company owns or controls twenty percent or more of the voting shares, or over which it exerts significant influence over operating and financial policies, the equity method of accounting is used. The Company's share of net income or losses of equity investments is included in the Consolidated Statements of Operations and was not material in any period presented.

Restricted Investments—Restricted investments consist of fixed income securities with maturities in excess of three months that are restricted because they are currently held as collateral for certain insurance obligations.

Product Warranty—The Company generally records estimated product warranty costs at the time of sale. Manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Generally, product warranties are implicit in the sale; however, the customer may purchase an extended warranty. Manufactured equipment is also warranted in the same manner as product warranties. However, in

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most instances the warranty is either negotiated in the contract or sold as a separate component. Warranty period terms range from 90 days (e.g., consumable products) up to 20 years (e.g., power system batteries.) The warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and in certain instances estimated property damage.

Environmental Costs—Tyco is subject to laws and regulations relating to protecting the environment. Tyco provides for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated. The Company discounts environmental liabilities using a risk-free rate of return when the obligation is fixed or reliably determinable. The impact of the discount on the Consolidated Balance Sheets at September 30, 2004 and 2003 was to reduce the obligation by $20 million and $17 million, respectively.

Income Taxes—Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities and operating loss carryforwards, using tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is provided to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Insurable Liabilities—The Company records liabilities for its workers' compensation, product, general and auto liabilities up to pre-determined program deductibles subsequent to which the risk of loss is transferred to the Company's insurance carriers. The determination of these liabilities and related expenses is dependent on claims experience. For certain of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience. Certain insurance liabilities are discounted using a risk-free rate of return when the obligation is reliably determinable. The impact of the discount on the Consolidated Balance Sheets at September 30, 2004 and 2003 was to reduce the obligation by $45 million and $32 million, respectively.

Financial Instruments—All derivative financial instruments are reported on the Consolidated Balance Sheets at fair value. Changes in a derivative financial instrument's fair value are recognized currently in earnings unless specific hedge criteria are met. At its inception, if the derivative financial instrument is designated as a fair value hedge, the changes in the fair value of the derivative financial instrument and the hedged item attributable to the hedged risk are recognized as a charge or credit to earnings.

        Fair value estimates are based on relevant market information, including current market rates and prices, assuming adequate market liquidity. Fair value estimates for interest rate and cross-currency swaps are calculated by the Company or are provided to the Company by high-quality, third-party financial institutions known to be high volume participants in this market.

        The Company uses derivative financial instruments to manage exposures to foreign currency and interest rate risks. The Company's objective for utilizing derivatives is to manage these risks using the most effective methods to eliminate or reduce the impacts of these exposures. For those transactions that are designated as hedges, the Company documents relationships between hedging instruments and hedged items, and links derivatives designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the Consolidated Balance Sheets or to specific firm commitments or

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forecasted transactions. For transactions designated as hedges, the Company also assesses and documents, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are effective in offsetting changes in fair values or cash flows associated with the hedged items.

        As part of managing the exposure to changes in market interest rates, the Company enters into various interest rate swap transactions with financial institutions acting as principal counterparties. To ensure both appropriate use as a hedge and hedge accounting treatment, all derivatives entered into are designated according to a hedge objective against specified liabilities such as a specifically underwritten debt issue. The Company's primary hedge objectives include the conversion of fixed-rate liabilities to variable rates. The derivative financial instruments associated with these objectives are classified as fair value hedges.

        As part of managing the exposure to changes in foreign currency exchange rates, the Company utilizes forward and option contracts with financial institutions acting as principal counterparties. The objective of these hedging contracts is to minimize impacts to cash flows due to changes in foreign currency exchange rates on intercompany loans, booked accounts and notes receivable and accounts payable, and forecasted transactions. Only in very limited circumstances is hedge accounting designated. The remaining hedges are marked to market.

        The Company's derivative financial instruments present certain market and counterparty risks; however, concentration of counterparty risk is mitigated as Tyco deals with a variety of major banks worldwide with long-term Standard & Poor's and Moody's credit ratings of A/A2 or higher. In addition, only conventional derivative financial instruments are utilized thereby affording optimum clarity as to the market risk. None of the Company's derivative financial instruments outstanding at year end would result in a significant loss to the Company if a counterparty failed to perform according to the terms of its agreement. At this time, the Company does not require collateral or other security to be furnished by the counterparties to its derivative financial instruments.

Share Premium and Contributed Surplus—In accordance with the Bermuda Companies Act 1981, when Tyco issues shares for cash at a premium to their par value, the resulting premium is credited to a share premium account, a non-distributable reserve. When Tyco issues shares in exchange for shares of another company, the excess of the fair value of the shares acquired over the par value of the shares issued by Tyco is credited, where applicable, to contributed surplus, which is, subject to certain conditions, a distributable reserve.

Use of Estimates—The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make extensive use of estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates in these Consolidated Financial Statements include restructuring and other charges and credits, acquisition liabilities, allowances for doubtful accounts receivable, estimates of future cash flows associated with asset impairments, useful lives for depreciation and amortization, loss contingencies, net realizable value of inventories, fair values of financial instruments, estimated contract revenue and related costs, environmental and legal liabilities, income taxes and tax valuation reserves, and the determination of discount and other rate assumptions for pension and postretirement employee benefit expenses. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the event or circumstances giving rise to such changes occur.

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Reclassifications—Certain prior year amounts have been reclassified to conform with current year presentation, the most significant of which are deferred taxes and discontinued operations.

Accounting Pronouncements—In November 2003, the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board ("FASB") reached a consensus on EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." EITF 03-1 provides guidance on determining other-than-temporary impairments and its application to marketable equity securities and debt securities accounted for under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." In September 2004, the FASB issued FASB Staff Position ("FSP") EITF Issue 03-1-1 which delayed the effective date for the measurement and recognition guidance contained in the EITF 03-1 pending finalization of the draft FSP EITF Issue 03-1-a, "Implementation Guidance for the Application of Paragraph 16 of EITF 03-1." The disclosure requirements of EITF 03-1 remain in effect. The Company adopted the disclosure requirements of EITF 03-1 as of September 30, 2004. The adoption of the recognition and measurement provisions of EITF 03-1 are not expected to have a material impact on the Company's results of operations, financial position or cash flows.

        In December 2003, the FASB issued FASB Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities" (revised December 2003 as FIN 46R). FIN 46R further explains how to identify Variable Interest Entities ("VIE") and how to determine when a business enterprise should include the assets, liabilities, noncontrolling interest and results of VIE in its financial statements. The Company adopted FIN 46R as of March 31, 2004. As a result, the joint ventures that were previously consolidated under FIN 46 were deconsolidated effective March 31, 2004. See Note 9 for further discussion of the impact of FIN 46R.

        In December 2003, the FASB issued a revision to SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," to improve financial statement disclosure for defined benefit plans. This statement requires additional disclosures about the assets (including plan assets by category), obligations and cash flows of defined pension plans and other defined benefit postretirement plans. It also requires reporting of various elements of pension and other postretirement benefit costs on a quarterly basis. Generally, the disclosure requirements are effective for interim periods beginning after December 15, 2003; however, information about foreign plans is effective for fiscal years ending after June 15, 2004. Tyco adopted the revised SFAS No. 132 during the quarter ended March 31, 2004. See Note 19 for further discussion of retirement plans.

        In December 2003, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which supercedes SAB 101, "Revenue Recognition in Financial Statements." SAB 104's primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superceded as a result of the issuance of EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." The issuance of SAB 104 reflects the concepts contained in EITF 00-21. The other revenue recognition concepts contained in SAB 101 remain largely unchanged. The issuance of SAB 104 did not have a material impact on the Company's results of operations, financial position or cash flows.

        In May 2004, the FASB issued FSP No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003." FSP No. 106-2 provides guidance on the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") on postretirement health care plans that provide

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prescription drug benefits. FSP No. 106-2 also requires certain disclosures regarding the effect of the federal subsidy provided by the Act. FSP No. 106-2 is effective for Tyco in the fourth quarter of 2004. The adoption of FSP No. 106-2 did not have a material impact on the Company's results of operations, financial position or cash flows.

        In September 2004, the EITF reached a consensus on EITF Issue No. 04-8 "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share". This EITF requires that contingently convertible debt securities with a market price trigger be included in diluted earnings per share, regardless of whether the market price trigger has been met. EITF 04-8 is effective for all periods ending after December 15, 2004 and requires retroactive restatement of previously reported earnings per share. Any contingently convertible instrument that is settled in cash before December 31, 2004 would not be reflected in the retroactive restatement. The adoption of this EITF is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS No. 151 amends Accounting Research Bulletin ("ARB") No. 43, Chapter 4, to clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges. In addition, SFAS No. 151 requires that allocation of fixed production overhead to inventory be based on the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company is currently assessing the impact that SFAS No. 151 will have on the results of operations, financial position or cash flows.

2.    Restructuring and Other Charges (Credits), Net

        Restructuring and other charges (credits), net, during the years ended September 30, 2004, 2003 and 2002 are as follows ($ in millions):

	2004			2003			2002
Fire and Security	$	175		$	10		$	95
Electronics		(33	)		(72	)		1,115
Healthcare		11			(8	)		45
Engineered Products and Services		53			8			48
Plastics and Adhesives		44			(1	)		10
Corporate and Other(1)		6			(21	)		559
		256			(84	)		1,872
Less:     Inventory (charged) credited to cost of sales		(7	)		10			(636	)
Bad debt provision charged to selling, general and administrative               expenses		—			—			(115	)
Restructuring and other charges (credits), net	$	249		$	(74	)	$	1,121

⁽¹⁾

Includes restructuring (credits) charges for the TGN business held for sale of $0 million, $(19) million and $390 million for 2004, 2003 and 2002, respectively.

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TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2004 Charges and Credits

        Activity for the Company's 2004 restructuring reserves is as follows ($ in millions):

	Employee Severance and Benefits			Facilities Exit Costs			Other			Non-cash Charges			Total
Charges	$	212		$	82		$	28		$	7		$	329
Utilization		(100	)		(30	)		(25	)		(7	)		(162	)
Credits		(8	)		—			—			—			(8	)
Currency translation		1			1			—			—			2
Balance at September 30, 2004	$	105		$	53		$	3		$	—		$	161

        During 2004, the Company approved and announced to employees various plans to exit 210 facilities primarily in the United States. These plans included the termination of approximately 10,840 employees and resulted in restructuring charges totaling $329 million, including $7 million reflected in cost of sales for the non-cash write-down in carrying value of inventory, $212 million for employee severance and benefits, $82 million for facility exit costs and $28 million for other related costs. Through September 30, 2004, a total of $100 million, $30 million and $25 million related to employee severance and benefits, facilities exit costs and other, respectively, had been expended related to these plans. During 2004, the Company completed certain activities related to these plans for amounts less than originally estimated, and accordingly the Company reversed $8 million of restructuring reserves as a restructuring credit. At September 30, 2004, these reserves had an aggregate balance of $161 million. The Company expects to incur approximately $15 million of additional restructuring charges related to the 2004 restructuring plans in early 2005. Cash payments related to these reserves are expected through 2005.

        In addition to the amounts reflected in the table above, during 2004, the Company sold certain cable-laying sea vessels and other assets that were written down to their expected net realizable value in prior years for amounts greater than originally estimated and recorded related gains as restructuring credits of $40 million. During 2004, the Company also completed certain restructuring activities announced in prior years for amounts less than originally estimated, and accordingly the Company reversed $25 million of restructuring reserves as a restructuring credit.

        During 2004, Fire and Security recorded restructuring charges of $184 million related to 2004 restructuring plans, including $4 million reflected in cost of sales for the non-cash write-down in carrying value of inventory. Additionally, Fire and Security completed certain restructuring activities announced in prior years for amounts less than originally estimated, and accordingly reversed $9 million of restructuring reserves as a restructuring credit.

        During 2004, Electronics recorded restructuring charges of $16 million related to 2004 restructuring plans, including $1 million reflected in cost of sales for the non-cash write-down in carrying value of inventory. Additionally, during 2004, Electronics sold certain cable-laying sea vessels and other assets that were impaired in prior years for amounts greater than originally anticipated and recorded the related gain as a restructuring credit of $34 million. Electronics also completed certain

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restructuring activities for amounts less than originally estimated, and accordingly reversed $15 million of restructuring reserves as a restructuring credit.

        During 2004, Healthcare recorded restructuring charges of $13 million related to 2004 restructuring plans. Additionally, Healthcare completed restructuring activities announced in prior years for amounts less than originally anticipated, and accordingly reversed $2 million of restructuring reserves as a restructuring credit.

        During 2004, Engineered Products and Services recorded restructuring charges of $55 million related to 2004 restructuring plans, including $1 million reflected in cost of sales for the non-cash write-down in carrying value of inventory. Engineered Products and Services expects to incur approximately $15 million of additional restructuring charges related to the 2004 restructuring plans in early 2005. Additionally, Engineered Products and Services completed certain restructuring activities for amounts less than originally anticipated, and accordingly reflected $2 million as a restructuring credit during 2004.

        During 2004, Plastics and Adhesives recorded restructuring charges of $44 million related to 2004 restructuring plans, including $1 million reflected in cost of sales for the non-cash write-down in carrying value of inventory.

        During 2004, Corporate recorded restructuring charges of $17 million related to 2004 restructuring plans. In addition, Corporate completed certain restructuring activities announced in prior years for amounts less than originally anticipated, and accordingly reversed $7 million of restructuring reserves as a restructuring credit. In addition, during 2004, Corporate sold certain TGN assets that were written down to their expected net realizable value in prior years for amounts greater than originally anticipated and recorded the related gain as a restructuring credit of $4 million.

2003 Charges and Credits

        Activity for the Company's 2003 restructuring reserves is summarized as follows ($ in millions):

	Employee Severance and Benefits			Facilities Exit Costs			Other			Non-cash Charges			Total
Charges	$	30		$	8		$	2		$	21		$	61
Utilization		(15	)		(3	)		—			(21	)		(39	)
Balance at September 30, 2003		15			5			2			—			22
Utilization		(12	)		(3	)		(1	)		—			(16	)
Credits		(1	)		(2	)		(1	)		—			(4	)
Balance at September 30, 2004	$	2		$	—		$	—		$	—		$	2

        During 2003, the Company approved and announced to employees various plans to exit 22 facilities primarily in the United States and Germany. These plans included the termination of approximately 1,500 employees and other related exit costs. These decisions resulted in restructuring charges totaling $61 million, including $10 million reflected in cost of sales for the non-cash write-down in carrying value of inventory and $11 million of other non-cash charges, $30 million for employee severance and benefits, $8 million for facility exit costs and $2 million for other related costs. Through September 30, 2004, a total of $27 million, $6 million and $1 million related to employee severance and

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benefits, facility exit costs and other, respectively, had been expended related to these plans. During 2004, the Company completed certain restructuring activities related to these plans for amounts less than originally estimated, and accordingly the Company reversed $4 million of restructuring reserves as a restructuring credit.

        In addition to the amounts reflected in the table above, during 2003, the Company recorded $145 million of restructuring and other credits which includes the reversal of restructuring reserves related to completing certain restructuring activities announced in prior years for amounts less than originally estimated.

        During 2003, Fire and Security recorded restructuring charges of $26 million related to 2003 restructuring plans, including $4 million reflected in cost of sales for the non-cash write-down in carrying value of inventory and $3 million in non-cash restructuring charges. Additionally, Fire and Security completed certain restructuring activities announced in prior years for amounts less than originally estimated, and accordingly reversed $16 million of restructuring reserves as a restructuring credit.

        During 2003, Electronics recorded restructuring and other credits of $72 million, including $20 million of credits reflected in cost of sales relating to sales of certain inventory impaired in prior years for amounts greater than originally anticipated. These restructuring credits primarily related to severance costs being less than originally anticipated due to employee attrition and redeployment and termination fees being less than anticipated due to negotiated settlements.

        During 2003, Healthcare recorded restructuring credits of $8 million related to the completion of restructuring activities announced in prior years for amounts less than originally anticipated.

        During 2003, Engineered Products and Services recorded restructuring charges of $18 million related to 2003 restructuring plans, including $6 million reflected in cost of sales for the non-cash write-down in carrying value of inventory. Additionally, Engineered Products and Services recorded $10 million of restructuring and other credits which includes the reversal of restructuring reserves related to completing certain restructuring activities announced in prior years for amounts less than originally estimated.

        During 2003, Plastics and Adhesives recorded restructuring credits of $1 million related to the completion of restructuring activities announced in prior years for amounts less than originally anticipated.

        During 2003, Corporate recorded restructuring charges of $17 million related to 2003 restructuring plans which includes $8 million in non-cash charges. In addition, Corporate recorded $38 million of restructuring and other credits which includes the reversal of restructuring reserves related to completing certain restructuring activities announced in prior years for amounts less than originally estimated.

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2002 Charges and Credits

        Activity for the Company's 2002 restructuring reserves is summarized as follows ($ in millions):

	Employee Severance and Benefits			Facilities Exit Costs			Other			Non-cash Charges			Total
Charges	$	381		$	277		$	512		$	751		$	1,921
Utilization		(205	)		(82	)		(90	)		(636	)		(1,013	)
Credits		(4	)		(11	)		(3	)		—			(18	)
Balance at September 30, 2002		172			184			419			115			890
Utilization		(123	)		(59	)		(265	)		—			(447	)
Credits		(18	)		6			(48	)		—			(60	)
Transfers/reclassifications		—			—			(23	)		(115	)		(138	)
Currency translation		5			(1	)		(2	)		—			2
Balance at September 30, 2003		36			130			81			—			247
Utilization		(17	)		(44	)		(27	)		—			(88	)
Credits		(11	)		(2	)		2			—			(11	)
Transfers/reclassifications		—			(2	)		—			—			(2	)
Assets held for sale		—			(31	)		(53	)		—			(84	)
Currency translation		1			—			—			—			1
Balance at September 30, 2004	$	9		$	51		$	3		$	—		$	63

        During 2002, the Company approved and announced to employees various plans to exit 198 facilities primarily in the United States, Europe and Latin America which includes the restructuring of certain operations within the Tyco Telecommunications business. These plans included the termination of approximately 14,100 employees and other related exit costs. These decisions resulted in restructuring charges totaling $1,921 million, including $636 million in cost of sales for the non-cash write-down in carrying value of inventory and $115 million recorded in selling, general and administrative expenses for an increase to the bad debt provision. The balance of the 2002 charge includes $381 million for employee severance and benefits, $277 million for facility exit costs and $512 million for other related costs. Through September 30, 2004, a total of $345 million, $185 million and $382 million related to employee severance and benefits, facility exits costs and other related costs, respectively, had been expended related to these plans. Through September 30, 2004, the Company has completed certain activities under these plans for amounts less than originally estimated and as a result reversed $89 million of restructuring reserves as restructuring credits. The Company also reclassified $140 million primarily related to the bad debt provision to other balance sheet accounts.

        In addition, during 2002 the Company completed certain restructuring activities announced in prior years for amounts less than previously estimated. As a result, the Company reversed $31 million of restructuring reserves as restructuring credits.

        During 2002, Fire and Security recorded restructuring charges of $113 million related to 2002 restructuring plans, including $19 million reflected in cost of sales for the non-cash write-down in carrying value of inventory. Additionally, Fire and Security completed certain restructuring activities

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announced in prior years for amounts less than originally estimated, and accordingly reversed $18 million of restructuring reserves as a restructuring credit.

        During 2002, Electronics recorded restructuring charges of $1,141 million related to 2002 restructuring plans, including $609 million reflected in cost of sales for the non-cash write-down in carrying value of inventory and $533 million related primarily to facility closures during 2002. Additionally, Electronics also completed certain restructuring activities for amounts less than originally estimated, and accordingly reversed $26 million of restructuring reserves a restructuring credit.

        During 2002, Healthcare recorded restructuring charges of $49 million related to 2002 restructuring plans, including $1 million reflected in cost of sales for the non-cash write-down in carrying value of inventory. Additionally, Healthcare completed restructuring activities announced in prior years for amounts less than originally anticipated, and accordingly reversed $4 million of restructuring reserves as a restructuring credit.

        During 2002, Engineered Products and Services recorded restructuring charges of $48 million related to 2002 restructuring plans, including $6 million reflected in cost of sales for the non-cash write-down in carrying value of inventory.

        During 2002, Plastics and Adhesives recorded restructuring charges of $10 million related to 2002 restructuring plans, including $1 million reflected in cost of sales for the non-cash write-down in carrying value of inventory.

        During 2002, Corporate recorded charges of $559 million, including $115 million reflected in selling, general and administrative expenses to increase the bad debt provision. These charges include $390 million related to the impairment of the TGN, including the bad debt provision discussed above. These charges also reflect costs to consolidate the corporate headquarters and the write-off of investment banking fees and other deal costs associated with the terminated break-up plan and certain acquisitions that were not completed.

Total Restructuring Reserves

        The Company's restructuring reserves by segment at September 30, 2004 are as follows ($ in millions):

	2004		2003
Fire and Security	$	102	$	34
Electronics		74		126
Healthcare		10		2
Engineered Products and Services		36		1
Plastics and Adhesives		10		2
Corporate and Other		5		129
Balance at September 30, 2004	$	237	$	294

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        At September 30, 2004 and 2003, restructuring reserves were included in the Company's Consolidated Balance Sheets as follows ($ in millions):

	2004		2003
Accrued and other current liabilities	$	171	$	160
Other liabilities		66		134
Restructuring reserves	$	237	$	294

3.    Charges for the Impairment of Long-Lived Assets

2004 Charges

        During 2004, the Company recorded total charges for the impairment of long-lived assets held for use in continuing operations of $99 million. Plastics and Adhesives recorded charges for the impairment of property, plant and equipment of $47 million related to the Company's decision to close certain facilities as discussed in Note 2. Fire and Security recorded charges of $34 million primarily related to the write-down of a United States facility to its estimated fair value, and to a lesser extent, to the write-off of cash management software. In addition, Corporate, Engineered Products and Services, Electronics and Healthcare recorded combined charges of $18 million related to the impairment of property, plant and equipment.

2003 Charges

        During 2003, the Company recorded total charges for the impairment of long-lived assets of $825 million.

        Fire and Security recorded charges for the impairment of intangible assets of $101 million resulting from the further deterioration of future estimated cash flows anticipated from customers primarily in Mexico and certain Latin American countries following the curtailment, and in some instances, the termination of the ADT dealer program in these countries. In addition, $11 million of impairment charges were recorded related to the discontinuance of two brand names. Fire and Security also recorded charges for the impairment of property, plant and equipment of $21 million related primarily to subscriber systems and other fixed assets, as well as $10 million associated with the termination of a software development project.

        The Company recorded charges for the impairment of property, plant and equipment of $679 million at Corporate, of which $664 million related to the impairment of the TGN which was classified as held for sale. This impairment was recorded to write-off the entire TGN as a result of our intention to divest this business. The amount of the impairment was based upon estimates of its fair value, less costs to dispose. The remaining $15 million charge primarily related to the closure and relocation of corporate offices.

        In addition, other impairment charges of $2 million and $1 million that were recorded at Engineered Products and Services and Electronics, respectively.

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2002 Charges

        During 2002, the Company recorded total charges for the impairment of long-lived assets in continuing operations of $3,310 million.

        Fire and Security recorded a charge of $6 million related to the impairment of intangible assets resulting from the curtailment, and in certain markets, the termination of the ADT dealer program. In addition, Fire and Security recorded a charge of $109 million primarily related to the impairment of property, plant and equipment associated with the termination of a software development project. The software development project related to a strategy to develop a new comprehensive integrated customer database and associated applications for this segment and its acquired companies. During 2002, management, with the assistance of a third-party consultant, performed a full evaluation to determine the information technology needs of the Fire and Security business relative to where it stood then and expectations for it over the near future. As a result of this review, the Company decided to abandon the project, which was still in the development and testing stage, resulting in the write-off of capitalized costs.

        Electronics recorded a charge of $569 million, of which $541 million primarily related to the impairment of property, plant and equipment related to the closure of facilities as discussed in Note 2 and $28 million related to the impairment of intangible assets associated with undersea systems technology and know-how acquired through acquisitions.

        The Company recorded a charge of $2,611 million at Corporate, of which $2,582 million related to the impairment of the TGN, and $29 million related to the impairment of certain corporate properties associated with the consolidation of corporate headquarters discussed in Note 2.

        During 2002, the fiber optic capacity available in the market significantly exceeded overall market demand, which created sharply declining prices and reduced anticipated future cash flows for the TGN. As a result, the Company assessed the carrying value of the TGN assuming a held and used model applying an analysis that employed estimates as to current and future market pricing, demand and network completion costs. This analysis was highly sensitive to changes in these estimates. Based upon these estimates, the Company concluded that the value of its fiber optic network was partially impaired and consequently recorded an impairment charge during the quarter ended March 31, 2002. The amount of the impairment was based upon the difference between the carrying value of each asset group and the estimated fair value of those assets groups as of March 31, 2002. The estimated fair value of each asset group was determined using an income (discounted cash flow) approach. The cash flow forecasts were prepared using the 15-year estimated weighted-average useful life of each of the TGN asset groups. Probability factors were applied to various scenarios weighting the likelihood of each possible outcome. Then, each cash flow forecast was discounted using a weighted-average cost of capital of 15%. Based upon these analyses, the sum of the expected future discounted cash flows was subtracted from the carrying values of the asset groups resulting in an impairment loss for the TGN. The entire TGN placed in service as of March 31, 2002 was written-off at that time, as well as a portion of TGN construction in progress. The Company reconsidered the factors noted above, such as projected operating results, business plans and an estimate of discounted future cash flows, in order to retest the carrying value of the TGN for a further impairment at June 30, 2002 and September 30, 2002. The Company determined that no impairment charge was necessary at June 30, 2002. However, the further decline in the telecommunications industry necessitated an additional impairment charge and, therefore, a charge was recorded as of September 30, 2002.

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        Engineered Products and Services, Plastics and Adhesives, and Healthcare recorded charges of $10 million, $3 million and $2 million, respectively, related to the impairment of property, plant and equipment associated with the closure of facilities discussed in Note 2.

4.    Divestitures and Discontinued Operations

2004 Activity

        During 2004, the Company recorded net losses and impairments of divestitures of $116 million in continuing operations in connection with the divestiture or write-down to fair value of certain held for sale businesses. In addition, the Company also recorded losses on the sale of discontinued operations of $132 million ($123 million after tax) to write the carrying value of such assets down to their estimated fair value.

        During 2003, the Company conducted a comprehensive review of its core businesses, and as a result, implemented a divestiture program in early 2004. In connection with this program, the Company divested twenty-one and liquidated four non-core businesses across all business segments except Plastics and Adhesives and primarily within Fire and Security for aggregate proceeds of $252 million in cash, of which $16 million of the proceeds are currently held in escrow. Total assets and total liabilities of the divested businesses were $445 million and $115 million, respectively. Total assets include cash retained by the businesses sold of $13 million.

        Net revenue and net loss for 2004 through the date of disposition were $460 million and $43 million, respectively, for divested companies that did not meet the criteria for discontinued operations. Net revenue and net income for the year ended September 30, 2003 were $587 million and $24 million, respectively, for divested companies that did not meet the criteria for discontinued operations.

        Net revenue of 2004 discontinued operations for the years ended September 30, 2004, 2003 and 2002 were $889 million, $815 million and $766 million, respectively. Pretax (loss) income of these discontinued operations for the years ended September 30, 2004, 2003 and 2002 were $(135) million, $7 million and $19 million, respectively.

        The following table presents balance sheet information for discontinued operations and other businesses held for sale at September 30, 2004 and 2003 ($ in millions):

		2004		2003
Accounts receivable, net		$	209	$	160
Inventories			95		61
Prepaid expenses and other current assets			95		27
Property, plant and equipment, net			96		121
Other assets			120		120
	Total assets	$	615	$	489
Accounts payable		$	155	$	119
Accrued and other current liabilities			243		73
Other liabilities			125		—
	Total liabilities	$	523	$	192

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2003 Activity

        During 2003, Tyco recorded income from discontinued operations of $20 million for a restitution payment made by Frank E. Walsh Jr., a former director (see Note 14).

2002 Activity

        During 2002, the Company sold certain of its businesses for net proceeds of $139 million in cash that consisted primarily of businesses within Healthcare and Fire and Security. In connection with these dispositions, the Company recorded a net gain of $24 million, which is included in other expense, net in the Consolidated Statement of Operations.

        On July 8, 2002, the Company divested Tyco Capital (CIT Group Inc.) through the sale of 100% of the common shares of CIT Group Inc. ("CIT"), its principal operating subsidiary, in an initial public offering ("IPO"). Accordingly, the results of Tyco Capital are presented as discontinued operations. Operating results from the discontinued operations of Tyco Capital from October 1, 2001 through July 8, 2002 were $3.3 billion of finance income, $6.0 billion of pre-tax loss and $6.3 billion of net loss. The net loss includes a goodwill impairment charge of $6,638 million.

        During the quarter ended March 31, 2002, Tyco experienced disruptions to its business surrounding its announced break-up plan, a downgrade in its credit ratings, and a significant decline in its market capitalization. During this same time period, CIT also experienced credit downgrades and a disruption to its historical funding base. Further, market-based information developed in connection with the Company's preliminary consideration of the proposed IPO of CIT indicated that CIT's book value exceeded its estimated fair value as of March 31, 2002. As a result, the Company performed a SFAS No. 142 first step goodwill impairment analysis as of March 31, 2002 and concluded that an impairment charge was warranted at that time.

        Management's objective in performing the first step goodwill impairment analysis was to obtain relevant market-based data to calculate the estimated fair value of CIT as of March 31, 2002 based on its projected earnings and market factors expected to be used by market participants in ascribing value to CIT in the planned separation of CIT from Tyco. Management obtained relevant market data from financial advisors regarding the range of price to earnings multiples and market condition discounts applicable to CIT as of March 31, 2002 and applied these market data to CIT's projected annual earnings as of March 31, 2002 to calculate an estimated fair value and any resulting goodwill impairment. The estimated fair value was compared to the corresponding carrying value of CIT at March 31, 2002. As a result, the Company recorded a $4,513 million impairment charge as of March 31, 2002, which is included in discontinued operations.

        A second step goodwill impairment analysis is required whenever a reporting unit's book value exceeds estimated fair value. This analysis required the Company to estimate the fair value of the reporting unit's individual assets and liabilities to complete the analysis of goodwill as of March 31, 2002. The Company completed this second step analysis for CIT during the quarter ended June 30, 2002 and, as a result, recorded an additional goodwill impairment charge of $132 million. During the June 30, 2002 quarter, CIT experienced further credit downgrades and the business environment and other factors continued to negatively impact the likely proceeds of the IPO. As a result, the Company performed another first step and second step analysis as of June 30, 2002 in a manner consistent with the March 2002 process described above. Each of these analyses was based upon updated market data

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at June 30, 2002 and through the period immediately following the IPO, including the IPO proceeds. These analyses resulted in a goodwill impairment of $1,867 million. Tyco also recorded an additional impairment charge of $126 million in order to write-down its investment in CIT to fair value for a total CIT goodwill impairment of $2,125 million. This write-down was based upon net IPO proceeds of approximately $4.4 billion, after deducting estimated out-of-pocket expenses, and is included in the $6,283 million loss from discontinued operations. During the fourth quarter of 2002, Tyco recorded a loss on the sale of Tyco Capital of $59 million.

5.    Acquisitions

Acquisitions

        During 2004, the Company completed the acquisition of 2 businesses within Engineered Products and Services and Fire and Security for an aggregate cost of $9 million. These acquisitions did not have a material effect on the Company's financial position, results of operations or cash flows.

        During 2003, the Company purchased seven businesses within Healthcare, Engineered Products and Services, Fire and Security and Electronics for an aggregate cost of $44 million in cash, net of $1 million of cash acquired. These acquisitions were funded utilizing cash from operations. The results of operations of the acquired companies have been included in Tyco's consolidated results from the respective acquisition dates.

        During 2002, the Company purchased approximately 130 businesses for an aggregate cost of $3,751 million, consisting of $1,684 million in cash, net of $158 million of cash acquired, and the issuance of approximately 48 million common shares valued at $1,919 million, plus the fair value of stock options and pre-existing put option rights assumed of $148 million ($103 million of the put option rights have been paid in cash). The 2002 acquisitions include, among others, SBC/Smith Alarm Systems, Century Tube Corporation, Sensormatic Electronic Corporation ("Sensormatic"), Transpower Technologies, DSC Group ("DSC"), Water & Power Technology, LINQ Industrial Fabrics, Inc., Paragon Trade Brands, Inc. ("Paragon"), Communications Instruments, Inc., Clean Air Systems and the purchase of the remaining minority public interest of TyCom Ltd. ("TyCom"). In addition, Tyco issued approximately 18 million common shares valued at $820 million in connection with its amalgamation with TyCom (see TyCom Ltd. discussion below). The fair value of debt of acquired companies aggregated $799 million. These acquisitions were funded utilizing net proceeds from the issuance of long-term debt. The results of operations of the acquired companies have been included in Tyco's consolidated results from the respective acquisition dates.

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TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        The following unaudited pro forma data summarize the results of operations for the year ended September 30, 2002, assuming that the acquisitions and the amalgamation with TyCom had been completed as of the beginning of the period. The pro forma data gives effect to actual operating results prior to the acquisitions and adjustments to interest expense and income taxes. No effect has been given to cost reductions or operating synergies. These pro forma amounts do not purport to be indicative of the results that would have actually been achieved if the acquisitions and amalgamation had occurred as of the beginning of the period presented or that may be achieved in the future.

(in millions, except per share data)		2002(1)
Net revenue		$	35,337
Loss from continuing operations			(2,860	)
Net loss			(9,188	)
Basic loss per share:
	Loss from continuing operations	$	(1.43	)
	Net loss		(4.60	)
Diluted loss per share:
	Loss from continuing operations	$	(1.43	)
	Net loss		(4.60	)

⁽¹⁾

Includes the impairment of long-lived assets of $3,310 million; net restructuring and other charges of $1,872 million; goodwill impairment charges of $1,344 million; a loss on investments of $271 million; a net gain on divestiture of $24 million; gain on the retirement of debt of $30 million; loss from discontinued operations of $6,270 million, net of tax; and a loss on the sale of discontinued operations of $59 million, net of tax. Excludes charges of $18 million for the write-off of purchased in-process research and development associated with the acquisitions of Sensormatic Electronics Corporation and DSC discussed in Note 6.

Acquisition Liabilities

        The Company paid $54 million, $172 million and $475 million in cash to fund acquisition liabilities related to acquisitions during 2004, 2003 and 2002, respectively.

        At September 30, 2004, there were no acquisition liabilities related to 2004 or 2003 acquisitions reflected on the Consolidated Balance Sheets.

        Activity in the 2002 acquisition liabilities is as follows ($ in millions):

	Employee Severance and Benefits			Facilities Exit Costs			Distributor and Supplier Cancellation Fees and Other			Total
Balance at September 30, 2002	$	39		$	52		$	10		$	101
Additions		15			3			8			26
Utilization		(24	)		(11	)		(6	)		(41	)
Currency translation		1			2			1			4
Reversals		—			—			(1	)		(1	)
Reductions of estimates		(10	)		(8	)		(9	)		(27	)
Balance at September 30, 2003		21			38			3			62
Utilization		(11	)		(8	)		—			(19	)
Currency translation		1			2			—			3
Reversals		(7	)		(3	)		(1	)		(11	)
Balance at September 30, 2004	$	4		$	29		$	2		$	35

        During 2002, the Company recorded $195 million of acquisition liabilities related to plans to integrate businesses acquired during 2002. During 2003, the Company finalized the integration plans that the Company began to assess and formulate at the date of the 2002 acquisitions, such as Paragon

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and Eberle Controls GmbH, and as a result recorded additional acquisition liabilities of $26 million and a corresponding increase to goodwill and deferred tax assets. These additions primarily reflect the additional distributor and supplier cancellation fees. Through September 30, 2004, a total of $155 million has been expended related to these plans. Through September 30, 2004, the Company also completed certain actions under these acquisition plans at costs that were less than originally estimated and as a result reduced its acquisition liabilities by $38 million. Goodwill and related deferred tax assets were reduced by an equivalent amount.

        The termination of employees and consolidation of facilities related to the 2002 acquisitions are essentially complete, except that cash payments will continue related primarily to certain long-term non-cancellable lease obligations and long-term severance arrangements.

        Activity in the 2001 acquisition liabilities is as follows ($ in millions):

	Employee Severance and Benefits			Facilities Exit Costs			Distributor and Supplier Cancellation Fees and Other			Total
Balance at September 30, 2002	$	130		$	207		$	58		$	395
Utilization		(57	)		(44	)		(21	)		(122	)
Currency translation		8			—			3			11
Reclassifications		—			3			(7	)		(4	)
Reversals		(67	)		(68	)		(27	)		(162	)
Balance at September 30, 2003		14			98			6			118
Utilization		(5	)		(21	)		(3	)		(29	)
Reclassifications		(2	)		(5	)		—			(7	)
Reversals		—			(6	)		(1	)		(7	)
Balance at September 30, 2004	$	7		$	66		$	2		$	75

        During 2001, the Company recorded $1,021 million of acquisition liabilities related to plans to integrate businesses acquired during 2001. During 2002, the Company finalized the integration plans that it began to assess and formulate at the date of the 2001 acquisitions, and as a result, recorded additional acquisition liabilities of $340 million. Through September 30, 2004, a total of $957 million had been expended related to these plans. Through September 30, 2004, the Company completed certain actions under these acquisition plans at costs that were less than originally estimated and as a result reduced 2001 acquisition liabilities by $300 million. Goodwill and related deferred tax assets in the aggregate were reduced by an equivalent amount. Through September 30, 2004, the Company reclassified $29 million of fair value adjustments related to the write-down of assets to other balance sheet accounts.

        Actions under the 2001 acquisition plans are essentially complete; however, cash payments will continue related primarily to certain long-term non-cancellable lease obligations and long-term severence arrangements.

        At September 30, 2004 and 2003, acquisition liabilities were included in the Company's Consolidated Balance Sheets as follows ($ in millions):

	2004		2003
Accrued and other current liabilities	$	29	$	80
Other liabilities		94		119
	$	123	$	199

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Holdback/Earn-out Liabilities

        The Company paid cash of approximately $53 million, $100 million and $150 million relating to holdback and earn-out liabilities related to certain prior period acquisitions during 2004, 2003 and 2002, respectively. The Company also issued 44,139 common shares valued at $2 million relating to earn-out liabilities during 2002. The value of these earn-out common shares is based upon the fair value of the stock at the time of issuance. Holdback liabilities represent a portion of the purchase price withheld from the seller pending finalization of the acquisition balance sheet. Certain acquisitions have provisions that would require Tyco to make additional "earn-out" payments to the sellers if the acquired company achieves certain milestones subsequent to its acquisition by Tyco. These earn-out payments are tied to certain performance measures, such as revenue, gross margin or earnings growth and are generally treated as additional purchase price.

        At September 30, 2004 and 2003, holdback/earn-out liabilities were included in the Company's Consolidated Balance Sheets as follows ($ in millions):

	2004		2003
Accrued and other current liabilities	$	59	$	93
Other liabilities		108		119
	$	167	$	212

ADT Dealer Program

        During the years ended September 30, 2004, 2003 and 2002, Tyco paid $254 million, $597 million and $1,138 million of cash, respectively, to acquire 0.3 million, 0.6 million and 1.4 million customer contracts for electronic security services through the ADT dealer program.

TyCom Ltd.

        On December 18, 2001, the Company completed its amalgamation with TyCom and each of the approximately 56 million TyCom common shares not owned by Tyco were converted into the right to receive 0.3133 of a Tyco common share. Upon completion of the amalgamation, TyCom became a wholly-owned subsidiary of Tyco, and each outstanding option to purchase TyCom common shares became exercisable for Tyco common shares, with the number of Tyco shares equal to the number of TyCom common shares issuable upon exercise immediately prior to the consummation multiplied by the exchange ratio of 0.3133. The per share exercise price for the Tyco common shares issuable upon the exercise of TyCom options equals the exercise price per TyCom common share, at the price for which such options were exercisable prior to the amalgamation, divided by the exchange ratio. In addition, each outstanding TyCom restricted share was converted into a restricted Tyco common share based on the exchange ratio. The options and restricted shares are subject to the same terms and conditions that were applicable immediately prior to the amalgamation.

6.    Write-Off of Purchased In-Process Research and Development

        During 2002, in connection with Tyco's acquisition of Sensormatic and DSC Group, the Company wrote-off the fair value of purchased in-process research and development ("IPR&D") of various projects for the development of new products and technologies in the amount of $18 million. Management determined the value of the IPR&D using, among other factors, appraisals.

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7.    Other Expense, Net

        During 2004, net other expense of $286 million consisted primarily of a $284 million loss related to the repurchase of a portion of its outstanding convertible debt prior to its scheduled maturity. See Note 15 to the Consolidated Financial Statements for details regarding debt repurchases.

        During 2003, net other expense of $223 million consisted primarily of a net loss on the retirement of debt of $128 million. See Note 15 for details regarding debt repurchases. Additionally, net other expense included an $87 million loss relating to the write-down of various investments when it became evident that the declines in the fair value of the investments were other than temporary, predominately due to the continuing depressed economic conditions, specifically within the telecommunications industry.

        During 2002, net other expense of $217 million consisted primarily of a $271 million loss on various investments, mainly related to its investments in FLAG Telecom Holdings Ltd. ("FLAG") when it became evident that the declines in the fair value of FLAG and other investments were other than temporary. This loss was partially offset by a gain of $30 million related to the retirement of debt and a net gain on divestiture of $24 million (see Note 4 to the Consolidated Financial Statements).

8.    Income Taxes

        The reconciliation between U.S. federal income taxes at the statutory rate and the Company's provision for income taxes on continuing operations for the years ended September 30, 2004, 2003 and 2002 are as follows ($ in millions):

		2004			2003			2002
Notional U.S. federal income tax expense (benefit) at the statutory rate		$	1,456		$	628		$	(927	)
Adjustments to reconcile to the income tax provision:
	U.S. state income tax (benefit) provision, net		40			(98	)		26
	Asset impairments		(19	)		120			785
	Non-U.S. net earnings (1)		(568	)		(242	)		(210	)
	Nondeductible charges		230			383			541
	Other		1			(34	)		(13	)
	Provision for income taxes		1,140			757			202
	Deferred provision		220			18			123
	Current provision	$	920		$	739		$	79

⁽¹⁾

Excludes asset impairments, nondeductible charges, and other items which are broken out separately in the table.

        The provisions for income taxes for 2004, 2003, and 2002 includes $577 million, $798 million, and $482 million, respectively, for non-U.S. income taxes. The provision (benefit) for income taxes in 2004 and 2003 includes $523 million and $57 million, respectively, for federal income taxes and $40 million and $(98) million, respectively, for state income taxes. Income tax (benefit) provision relating to discontinued operations was ($9) million, $7 million and $323 million for 2004, 2003 and 2002, respectively. Non-U.S. income (loss) from continuing operations before income taxes was $3,329 million, $2,827 million and $(665) million for 2004, 2003, and 2002, respectively.

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        Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax asset at September 30, 2004 and 2003 are as follows ($ in millions):

		2004			2003
Deferred tax assets:
	Accrued liabilities and reserves	$	1,579		$	1,415
	Tax loss and credit carryforwards		2,851			1,814
	Inventories		211			153
	Postretirement benefits		500			708
	Deferred revenue		254			269
	Other		352			483
			5,747			4,842
Deferred tax liabilities:
	Property, plant and equipment		(583	)		(119	)
	Intangibles assets		(408	)		(335	)
	Other		(260	)		(18	)
			(1,251	)		(472	)
Net deferred tax asset before valuation allowance			4,496			4,370
Valuation allowance			(1,992	)		(1,879	)
	Net deferred tax asset		2,504		$	2,491

        The presentation of deferred tax assets and liabilities in prior years has been reclassified for comparability purposes to reflect the results of a detailed analysis of deferred tax assets and liabilities completed during 2004. This reclassification included recording an additional deferred tax asset and a related full valuation allowance of $1,026 million as of September 30, 2003.

        At September 30, 2004, the Company had $3,644 million of net operating loss carryforwards in certain non-U.S. jurisdictions. Of these, $2,555 million have no expiration, and the remaining $1,089 million will expire in future years through 2013. In the U.S., there were approximately $3,608 million of federal and $3,459 million of state net operating loss carryforwards at September 30, 2004, which will expire in future years through 2024.

        The valuation allowance for deferred tax assets of $1,992 million and $1,879 million at September 30, 2004 and 2003, respectively, relates principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets. The valuation allowance was calculated in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes," which requires that a valuation allowance be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. At September 30, 2004, approximately $424 million of the valuation allowance will ultimately reduce goodwill if the net operating losses are utilized.

        The Company and its subsidiaries' income tax returns are periodically examined by various tax authorities. In connection with such examinations, certain tax authorities, including the U.S. Internal Revenue Service ("IRS"), have raised issues and proposed tax deficiencies. The Company is reviewing the issues raised by the tax authorities and is contesting certain proposed tax deficiencies. Amounts

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related to these tax deficiencies and other tax contingencies that management has assessed as probable and estimable have been recorded through the income tax provision.

        The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. These tax liabilities are reflected net of related tax loss carryforwards. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. Further, management has reviewed with tax counsel the issues raised by these taxing authorities and the adequacy of these recorded amounts. If the Company's estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities may result in income tax benefits being recognized in the period when we determine the liabilities are no longer necessary. Substantially all of these potential tax liabilities are recorded in other liabilities on the Consolidated Balance Sheets as payment is not expected within one year.

        Except for earnings that are currently distributed, no additional provision has been made for U.S. or non-U.S. income taxes on the undistributed earnings of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to investments in subsidiaries, as such earnings are expected to be permanently reinvested, the investments are essentially permanent in duration, or the Company has concluded that no additional tax liability will arise as a result of the distribution of such earnings. A liability could arise if amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in subsidiaries.

        The American Jobs Creation Act of 2004 (the "AJCA"), signed into law in October 2004, replaces an export incentive with a deduction from domestic manufacturing income. It is not expected that the AJCA will have a material impact on the Company's income tax provision. The AJCA also allows the Company to repatriate up to $500 million of permanently reinvested foreign earnings in 2005 or 2006 at an effective tax rate of 5.25%. The Company is currently reviewing whether to take advantage of this new provision of the AJCA.

9.    Cumulative Effect of Accounting Change—Variable Interest Entities

        During 2003, the Company adopted FIN 46, which requires identification of the Company's participation in VIE's, which are entities with a level of invested equity that is not sufficient to fund future activities to permit them to operate on a stand alone basis, or whose equity holders lack certain characteristics of a controlling financial interest. For entities identified as VIE's, FIN 46 sets forth a model to evaluate potential consolidation based on an assessment of which party to VIE's, if any, bears a majority of the risk to its expected losses, or stands to gain from a majority of its expected returns.

        The Company has programs under which it sells machinery and equipment to investors who, in turn, purchase and receive ownership and security interests in those assets. As such, the Company may have certain investments in those affiliated companies whereby it provides varying degrees of financial support and where the investors are entitled to a share in the results of those entities, but the Company does not consolidate these entities. While these entities may be substantive operating companies, they have been evaluated for potential consolidation under FIN 46.

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        The Company has three synthetic lease programs utilized, to some extent, by all of the Company's segments to finance capital expenditures for manufacturing machinery and equipment and for ships used by Tyco Submarine Telecommunications. During 2003, the Company adopted FIN 46 and, accordingly, restructured one of the synthetic leases to meet the requirements of FIN 46 for off-balance sheet accounting. The Company reclassified the remaining two leases as capital leases and, consequently, recorded a $75 million after-tax loss ($115 million pretax) cumulative effect adjustment. In addition, total debt increased by $498 million at the time of consolidation, July 1, 2003.

        In 2003 in conjunction with adopting FIN 46, the Company also evaluated other investments and concluded that four joint ventures that were previously accounted for under the equity method of accounting within Tyco Infrastructure Services, in which the Company owns a minority interest, met the consolidation criteria set forth in FIN 46. Accordingly, these ventures were consolidated onto the Company's balance sheet effective July 1, 2003. The assets and liabilities of these joint ventures included on the Company's Consolidated Balance Sheets at September 30, 2003 were $112 million and $96 million, respectively.

        Subsequently, these four joint ventures were deconsolidated as of March 31, 2004 with the adoption of FIN 46R. The assets and liabilities of these joint ventures included in the Company's balance sheet at September 30, 2003 were $96 million and $69 million, respectively.

10.    Earnings (Loss) Per Share

        The reconciliations between basic and diluted earnings (loss) per share for the years ended September 30, 2004, 2003 and 2002 are as follows ($ in millions, except per share data):

		2004					2003					2002
		Income		Shares	Per Share Amount		Income		Shares	Per Share Amount		Loss			Shares	Per Share Amount
Basic earnings (loss) per share:
	Income (loss) from continuing operations	$	3,005	2,001	$	1.50	$	1,035	1,995	$	0.52	$	(2,851	)	1,989	$	(1.43	)
	Share options, restricted shares and deferred stock units		—	15				—	5				—		—
Exchange of convertible debt due 2010			109	200				1	3				—		—
Diluted earnings (loss) per share:
	Income (loss) from continuing operations, giving effect to dilutive adjustments	$	3,114	2,216	$	1.41	$	1,036	2,003	$	0.52	$	(2,851	)	1,989	$	(1.43	)

        The computation of diluted earnings per common share in 2004 excludes the effect of the potential exercise of options to purchase approximately 67 million shares because the effect would be anti-dilutive. Additionally, diluted earnings per common share excludes approximately 5 million and 4 million shares related to the Company's zero coupon convertible debentures due 2020 and 2021, respectively, because the conversion conditions have not been met.

        The computation of diluted earnings per common share in 2003 excludes the effect of the potential exercise of options to purchase approximately 110 million shares because the effect would be anti-dilutive. Diluted earnings per common share for 2003 excludes approximately 38 million and 4 million shares related to the Company's zero coupon convertible debentures due 2020 and 2021, respectively, because conversion conditions have not been met. Diluted earnings per common share for 2003 also excludes approximately 94 million shares and 49 million shares related to the Company's convertible senior debentures due 2018 and 2023, respectively, because the effect would be anti-dilutive.

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        The computation of diluted loss per common share in 2002 excludes the effect of the potential exercise of options to purchase approximately 10 million shares and the potential exchange of convertible debt due 2010 for approximately 3 million shares, because the effect would be anti-dilutive. Diluted loss per common share for 2002 also excludes approximately 48 million and approximately 25 million shares related to the Company's zero-coupon convertible debentures due 2020 and 2021, respectively, because conversion conditions have not been met.

11.    Sale of Accounts Receivable

        Tyco has several programs under which it may sell participating interests in accounts receivable to investors who, in turn, purchase and receive ownership and security interests in those receivables. As collections reduce accounts receivable included in the pool, the Company sells new receivables. The Company retains the risk of credit loss on the receivables and, accordingly, the full amount of the reserve has been retained on the Consolidated Balance Sheets. The proceeds from the sales were used to repay short-term and long-term borrowings and for working capital and other corporate purposes and are reported as operating cash flows in the Consolidated Statements of Cash Flows. The sale proceeds are less than the face amount of accounts receivable sold by an amount that approximates the cost that would be incurred if commercial paper were issued backed by these accounts receivable. The discount from the face amount is accounted for as a loss on the sale of receivables and has been included in selling, general and administrative expenses in the Consolidated Statements of Operations. Such discount aggregated $18 million, $29 million, and $17 million, or 3.1%, 3.5%, and 2.7% of the weighted-average balance of the receivables outstanding, during 2004, 2003 and 2002, respectively. The Company retains collection and administrative responsibilities for the participating interests in the defined pool. During 2004, the Company reduced outstanding balances under its accounts receivable programs by $929 million, of which $812 million relates to three of its corporate accounts receivable programs. At September 30, 2004 and 2003, the availability under corporate programs was $625 million and $1,025 million, respectively. At September 30, 2004 and 2003, the amounts utilized under these programs was zero and $803 million, respectively. The remaining reduction related to certain of the Company's international businesses selling fewer accounts receivable as a short-term financing mechanism. These transactions qualify as true sales. The aggregate amount outstanding under these arrangements was $99 million and $202 million at September 30, 2004 and 2003, respectively.

12.    Investments

        At September 30, 2004 and 2003, Tyco had available-for-sale equity investments with a fair market value of $104 million and $23 million and a cost basis of $104 million and $26 million, respectively. These investments are included in prepaid expenses and other current assets and other assets within the Consolidated Balance Sheets. As of September 30, 2004, there were unrealized losses of $2 million and unrealized gains of $5 million associated with these investments. At September 30, 2003, there were unrealized losses of $2 million and unrealized gains of $4 million associated with these investments. The unrealized gains and losses have been included as a separate component of shareholders' equity. See Note 7 for discussion of realized losses on equity investments.

        At September 30, 2004 and 2003, Tyco had held-to-maturity investments with a fair value of $19 million and $22 million, respectively. These investments are included in other assets within the Consolidated Balance Sheets.

        At September 30, 2004 and 2003, Tyco had restricted investments of $7 million and $470 million, respectively. The majority of these restricted investments are used to fund certain pension plans.

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TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.    Goodwill and Intangible Assets

        Goodwill was $25.5 billion and $25.5 billion at September 30, 2004 and 2003, respectively. The changes in the carrying amount of goodwill for 2003 and 2004 are as follows ($ in millions):

	Fire and Security			Electronics			Healthcare			Engineered Products and Services			Plastics and Adhesives			Total Tyco
Balance at September 30, 2002	$	7,932		$	7,858		$	6,532		$	2,896		$	708		$	25,926
Purchase accounting adjustments(1)		(232	)		(74	)		(131	)		(40	)		(3	)		(480	)
Acquisitions		4			2			1			11			—			18
Divestitures		—			—			(4	)		—			—			(4	)
Impairment		—			(278	)		—			—			—			(278	)
Other(2)		23			(126	)		(192	)		(14	)		(8	)		(317	)
Currency translation		351			96			17			192			7			663
Balance at September 30, 2003		8,078			7,478			6,223			3,045			704			25,528
Purchase accounting adjustments(3)		(59	)		(19	)		(158	)		4			(1	)		(233	)
Acquisitions		—			—			—			10			—			10
Divestitures		(124	)		(25	)		—			(4	)		—			(153	)
Held for sale		(12	)		—			—			—			—			(12	)
Currency translation		192			52			9			111			6			370
Balance at September 30, 2004	$	8,075		$	7,486		$	6,074		$	3,166		$	709		$	25,510

⁽¹⁾

The net decrease in goodwill includes $480 million associated with acquisitions completed prior to 2003, primarily related to fair value adjustments as well as the finalization of deferred taxes related to previously recorded acquisition liabilities.

⁽²⁾

During 2004, the Company undertook a comprehensive project to review its 2003 deferred income tax accounts. While the results of this project were not material to the Consolidated Financial Statements, the Company has reclassified certain prior year balances to enhance comparability.

⁽³⁾

The net decrease in goodwill includes $233 million primarily due to the finalization of deferred taxes related to previously completed acquisitions.

2004 Activity

        During 2004, the Company divested twenty-one and liquidated four non-core businesses (See Note 4). Under the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," it was determined that the recorded book value of these businesses would not be fully recovered. During 2004, the Company recorded goodwill impairments of $60 million of which $48 million related to divested businesses and $12 million related to businesses classified as held for sale, respectively.

2003 Activity

        During 2003, the Company changed its internal reporting structure such that the operations of Tyco's plastics and adhesives businesses (previously reported within Healthcare and Specialty Products) now comprise the Plastics and Adhesives reportable segment. As a result, the goodwill within Healthcare and Specialty Products was reassigned based on the relative fair value of the new reporting unit. No impairments resulted from this reevaluation.

        In the fourth quarter of 2003, the Company further reorganized its reporting structure (see Note 23). As part of that reorganization, the Company finalized a plan in September 2003 to sell the TGN, the major operating asset of the Tyco Submarine Telecommunications business. The results of the TGN business held for sale were previously included in Electronics, but are now presented within Corporate and Other. The Company plans to exit the TGN business held for sale because it has

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decided not to invest further in this industry. The reorganization resulted in a change in the composition of its reporting units. As a result, goodwill was reassigned to the new reporting units using a relative fair value allocation approach, resulting in the recognition of impairment charges of $278 million in Power Systems, Electrical Contracting Services and the Printed Circuit Group. This charge was based on a valuation performed by management with the assistance of a third party consultant using an income approach based on the present value of estimated future cash flows of each of the reporting units. After the impairment, there is no goodwill remaining at the Power Systems and Printed Circuit Group reporting units.

2002 Activity

        Under the transition provisions of SFAS No. 142, the Company's transitional benchmark analysis concluded that there was no goodwill impairment at October 1, 2001. However, during the quarter ended March 31, 2002, Electronics recorded a charge of $2,218 million related to the impairment of long-lived assets of the TGN, as a result of the fiber optic capacity available in the market significantly exceeding overall market demand, thereby creating sharply declining prices and reduced cash flows. For additional information on the TGN impairment charge, see Note 3. As such, an updated goodwill valuation was completed as of March 31, 2002 for Tyco Submarine Telecommunications. The valuation was completed using an income approach based upon the present value of future cash flows of the reporting unit as of March 31, 2002. However, this first step analysis resulted in no impairment of the Submarine Telecommunications reporting unit's goodwill at that date.

        During the quarter ended June 30, 2002, additional circumstances developed that indicated a potential impairment of the value of goodwill with respect to the Company's reporting units. Tyco experienced disruptions to its business surrounding the termination of its previously announced break-up plan, the resignation of its chief executive officer, further downgrades in its credit ratings and an additional decline in its market capitalization. Updated valuations were completed for all reporting units as of June 30, 2002 using an income approach based on the present value of future cash flows of each reporting unit. An additional discount factor was then applied to reflect a decrease in reporting unit valuations for recent disruptions at the Company's corporate offices and negative publicity about Tyco, as evidenced by the decline in the Company's total market capitalization. This resulted in goodwill impairment of $845 million, including $608 million relating to Tyco Submarine Telecommunications and $237 million relating to Tyco Infrastructure Services, a reporting unit within Engineered Products and Services.

        During the quarter ended September 30, 2002, step two analyses, as prescribed by SFAS No. 142, were completed for the Tyco Submarine Telecommunications and Tyco Infrastructure Services reporting units. This resulted in an incremental goodwill impairment on continuing operations of $162 million ($80 million relating Tyco Submarine Telecommunications and $82 million relating to Tyco Infrastructure Services).

        During the quarter ended September 30, 2002, circumstances associated with the restructuring charges related to the Submarine Telecommunications reporting unit indicated potential further impairment of the value of goodwill of this reporting unit. An updated valuation using an income approach based on the present value of future cash flows was completed as of September 30, 2002. The valuation resulted in an additional goodwill impairment on continuing operations of $337 million.

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Following the impairments recorded during 2002 totaling $1,344 million, there is no goodwill remaining at the Tyco Submarine Telecommunications and Tyco Infrastructure Services reporting units.

        During 2002, the Company curtailed, and in certain markets terminated, the ADT dealer program. Due to a decrease in projected purchases of customer contracts through the ADT dealer program, an updated valuation using an income approach based on the present value of future cash flows as of September 30, 2002 was performed for the Security Services reporting unit. The valuation results indicated that the fair value of the reporting unit exceeded the book value of the reporting unit, resulting in no impairment of the Security Services reporting unit's goodwill at that date.

        See Note 4, "Divestitures and Discontinued Operations," for information regarding the impairment of goodwill relating to Tyco Capital.

        Intangible assets, net were $5,335 million and $5,779 million at September 30, 2004 and 2003, respectively. Accumulated amortization amounted to $3,066 million and $2,489 million at September 30, 2004 and 2003, respectively. The following table sets forth the gross carrying amount and accumulated amortization of the Company's intangible assets at September 30, 2004 and 2003 ($ in millions):

		2004					2003
		Gross Carrying Amount		Accumulated Amortization		Weighted Average Amortization Period(1)	Gross Carrying Amount		Accumulated Amortization		Weighted Average Amortization Period(1)
Contracts and related customer relationships		$	4,613	$	2,161	12 years	$	4,400	$	1,736	12 years
Intellectual property			3,549		837	20 years		3,607		691	20 years
Other			239		68	26 years		261		62	27 years
	Total	$	8,401	$	3,066	17 years	$	8,268	$	2,489	17 years

⁽¹⁾

Intangible assets not subject to amortization are excluded from the calculation of the weighted average
amortization period.

        During 2004, the Company reassessed the useful lives of certain intangible assets. This reassessment resulted in an immaterial charge to amortization expense due to shortening the amortization periods for certain patents and reclassifying certain tradenames to indefinite-lived intangible assets. The intangible asset classifications have been conformed to the current period presentation.

        As of September 30, 2004 and 2003, the Company had $672 million and $678 million of intangible assets not subject to amortization, respectively. These assets as of September 30, 2004 primarily relate to tradenames of $389 million in Healthcare, intellectual property (primarily trademarks) of $261 million in Fire and Security as well as Engineered Products and Services, and $22 million of other intangible assets. The intangible assets not subject to amortization as of September 30, 2003 primarily relate to tradenames of $389 million in Healthcare, intellectual property (primarily trademarks) of $261 million in Fire and Security as well as Engineered Products and Services, and $28 million of other intangibles.

        Intangible asset amortization expense for the years ended September 30, 2004, 2003 and 2002 was $698 million, $724 million and $619 million, respectively. The estimated aggregate amortization expense on intangible assets currently owned by the Company is expected to be approximately $650 million for 2005, $600 million for 2006, $500 million for 2007, $450 million for 2008, and $450 million for 2009.

        See Note 3 for information regarding the impairment of intangible assets.

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14.    Related Party Transactions

        The Company has amounts due related to loans and advances issued to employees in prior years under the Company's Key Employee Loan Program, relocation programs and other advances made to executives. Loans were provided to employees under the Company's Key Employee Loan Program, which is now discontinued except for outstanding loans, for the payment of taxes upon the vesting of shares granted under our Restricted Share Ownership Plans. The loans are not collateralized and bear interest, payable annually, at a rate based on the six-month LIBOR, calculated annually as the average of the 12 rates in effect on the first day of the month. Loans are generally repayable in ten years, except that earlier payments are required under certain circumstances, such as when an employee is terminated. In addition, the Company issued mortgages to certain employees under employee relocation programs. These mortgages are generally payable in 15 years and are collateralized by the underlying property. During 2004 and 2003, the maximum amount outstanding under these programs was $78 million and $82 million, respectively. Loans receivable under these programs, as well as other unsecured advances outstanding, were $70 and $79 million at September 30, 2004 and 2003, respectively. The total outstanding loans receivable includes loans to L. Dennis Kozlowski, the Company's former Chairman and Chief Executive Officer (until June 2002). The amount outstanding under these loans, plus accrued interest, was $49 million and $48 million at September 30, 2004 and 2003, respectively, and the rate of interest charged on such loans was 1.25%. Interest income on the remaining interest bearing loans totaled $1 million, $1 million, and $6 million in 2004, 2003 and 2002, respectively. Certain of the above loans totaling $21 million and $24 million at September 30, 2004 and 2003, respectively, are non-interest bearing. The total non-interest bearing loans include loans to Mark A. Belnick, the Company's former Executive Vice President and Chief Corporate Counsel. The amount outstanding at both September 30, 2004 and 2003 was $15 million.

        During 2004, the Company engaged in commercial transactions in the normal course of business with companies where the Company's Directors were employed and served as officers, including Marsh & McLennan Companies, Inc., Brunswick Corporation and VF Corporation. Sandra S. Wijnberg, a Director, is an executive officer of Marsh & McClennan Companies, Inc. George W. Buckley, a Director, is an executive officer of Brunswick Corporation. Mackey J. McDonald, a Director, is an executive officer of VF Corporation. Purchases from Marsh & McLennan Companies, Inc. during 2004 were approximately $22 million. Purchases from other companies noted above during 2004 aggregated less than 1 percent of consolidated net revenue.

        During 2003, the Company engaged in commercial transactions in the normal course of business with companies where the Company's Directors were employed and served as officers, including Marsh & McLennan Companies, Inc., Brunswick Corporation, VF Corporation, Verizon Communications, Inc., Imperial Chemical Industries PLC and MicroWarehouse, Inc. Sandra S. Wijnberg, a Director, is an executive officer of Marsh & McClennan Companies, Inc. George W. Buckley, a Director, is an executive officer of Brunswick Corporation. Mackey J. McDonald, a Director, is an executive officer of VF Corporation. Bruce S. Gordon, a Director, was an officer of Verizon Communications, Inc. Brendan R. O'Neill and Jerome B. York, both Directors, were executive officers of Imperial Chemical Industries PLC and MicroWarehouse, Inc., respectively, at the time of these commercial transactions. Purchases from Marsh & McLennan Companies, Inc. and Imperial Chemical Industries PLC during 2003 were approximately $18 million and $16 million, respectively. Purchases from other companies noted above during 2003 aggregated less than $15 million.

        In 2001, Tyco authorized compensation arrangements to L. Dennis Kozlowski and Mark H. Swartz, the Company's Chief Financial Officer until August 2002. In connection with such arrangements, Tyco purchased executive split dollar life insurance policies for Messrs. Kozlowski and Swartz and entered

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into a shared ownership agreement with each of them whereby the Company agreed to pay premiums for these insurance policies for an 11-year period beginning in 2001. In 2001, amended policies were executed providing for additional Company-paid premiums. The Company is a co-beneficiary of the policies, less amounts owed to Messrs. Kozlowski and Swartz. Messrs. Kozlowski and Swartz are the beneficiaries of the cash surrender values of the policies plus the amount of any unpaid premiums. The Company's obligations under these arrangements were entered into in recognition of services rendered by these officers and were not contingent upon continuing employment. In 2001, the Company deposited $31 million into a consolidated rabbi trust to fund premiums on the policies. The Consolidated Financial Statements include charges of $27 million related to the initial awards for Mr. Kozlowski and $14 million for Mr. Swartz in 2001 and charges of $5 million for Mr. Kozlowski and $2 million for Mr. Swartz in 2002 under the policy, as amended. The Consolidated Financial Statements include charges of $6 million for Mr. Kozlowski in both 2004 and 2003. In the event the investment options within the policies do not earn specified interest amounts, Tyco has guaranteed a supplemental premium payment amount to ensure a 10% annual return on the cash surrender value, and any unpaid premiums. This liability is accreted by a charge to earnings throughout the period of the arrangements to make the specified supplemental premium payments, if any. In conjunction with Mr. Swartz's termination of employment, a lump sum payment of $25 million, which represented the present value of the annual premium amounts at his termination date for the remainder of the contractual period, was made to Mr. Swartz and in return Mr. Swartz waived Tyco's obligation to continue making premium payments. The Company has accrued $58 million and $53 million on our Consolidated Balance Sheets as of September 30, 2004 and 2003, respectively, in connection with these arrangements, of which $24 million is held in the rabbi trust as of September 30, 2004. Tyco's ability to withdraw monies from the rabbi trust for purposes other than premium payments requires Mr. Kozlowski's approval. Tyco discontinued making premium payments for Mr. Kozlowski's insurance policy as of October 1, 2002. The Company filed affirmative actions against Messrs. Kozlowski and Swartz, seeking disgorgement of all benefits under these executive life insurance policies. Pending resolution of such action against Mr. Kozlowski, premium obligations since October 2002 have been drawn down from the cash surrender value of such policy to avoid termination of such policy's death benefit.

        During 2002, Mark H. Swartz, the Company's former Chief Financial Officer, had outstanding loans from Tyco. The rate of interest charged on such loans was 2.11%. The maximum amount outstanding under these loans during 2002 was $25 million, plus accrued interest, and such loans were repaid in full prior to September 30, 2002.

        Richard J. Meelia, the President of Tyco Healthcare, had an outstanding loan under the Key Employee Loan Program. The rate of interest charged on such loan was 2.23% and 2.06% for 2003 and 2002, respectively. The maximum amount outstanding under this loan during 2003 and 2002 was significantly less than $1 million and $2 million, respectively, and such loan was repaid in full prior to September 30, 2003.

        During 2002, Robert P. Mead, the former President of Tyco Engineered Products and Services, had an outstanding loan under the Key Employee Loan Program. The rate of interest charged on such loan was 2.03%. The maximum amount outstanding under this loan during 2002 was approximately $1 million, and such loan was repaid in full prior to September 30, 2002.

        During 2002, Jerry R. Boggess, the former President of Tyco Fire and Security, had an outstanding loan under the Key Employee Loan Program. The rate of interest charged on such loan was 2.03%.

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The maximum amount outstanding under this loan during 2002 was less than $1 million, and such loan was repaid in full prior to September 30, 2002.

        During the fourth quarter of 2002, the Board of Directors and new senior management adopted a policy under which no new loans are allowed to be granted to any officers of the Company and existing loans are not allowed to be extended or modified.

        Certain former Tyco directors and executive officers owned TyCom Ltd. shares or options, which were converted to Tyco shares and Tyco options upon the amalgamation of a subsidiary of Tyco with TyCom Ltd. on December 18, 2001 at the exchange ratio applicable to all holders of TyCom Ltd. shares and options.

        Stephen W. Foss was a Director of Tyco until March 6, 2003. Mr. Foss is the owner of a corporate aircraft which the Company leased from him starting in May 2001 after seeking competitive bids of which Mr. Foss's bid was considered the most competitive given anticipated usage. Tyco paid Mr. Foss, and a company of which he is president, an aggregate of $587,000 in lease payments for the Company's use of the aircraft and its pilots during 2002. These leasing arrangements were terminated as of September 30, 2002.

        Joshua M. Berman was a Director of Tyco until December 5, 2002. From March 1, 2000 through July 31, 2002, the Company engaged Mr. Berman to render legal and other services. During this period, the Company compensated Mr. Berman an annual rate of $360,000 and provided Mr. Berman with health benefits, secretarial assistance, a cell phone and electronic security services for his homes. The Company also reimbursed Mr. Berman for legal fees and expenses incurred by him in connection with matters relating to Tyco pursuant to indemnification provisions applicable to all directors of Tyco. Mr. Berman is a retired counsel to the law firm Kramer Levin Naftalis & Frankel LLP, which provided legal services to the Company during 2002.

        The Company filed civil complaints against Messrs. Kozlowski and Swartz for breach of fiduciary duty and other wrongful conduct relating to alleged abuses of our Key Employee Loan Program and relocation program, unauthorized bonuses, unauthorized payments, self-dealing transactions and other improper conduct.

        In June 2002, the Company filed a civil complaint against Frank E. Walsh, Jr., a former director, for breach of fiduciary duty, inducing breaches of fiduciary duty and related wrongful conduct involving a $20 million payment by Tyco, $10 million of which was paid to Mr. Walsh with the balance paid to a charity of which Mr. Walsh is trustee. The payment was purportedly made for Mr. Walsh's assistance in arranging our acquisition of The CIT Group, Inc. On December 17, 2002, Mr. Walsh pleaded guilty to a felony violation of New York law in the Supreme Court of the State of New York, (New York County) and settled a civil action for violation of federal securities laws brought by the SEC in United States District Court for the Southern District of New York. Both the felony charge and the civil action were brought against Mr. Walsh based on such payment. The felony charge accused Mr. Walsh of intentionally concealing information concerning the payment from Tyco's directors and shareholders while engaged in the sale of Tyco securities in the State of New York. The SEC action alleged that Mr. Walsh knew that the registration statement covering the sale of Tyco securities as part of the CIT acquisition contained a material misrepresentation concerning fees payable in connection with the acquisition. Pursuant to the plea and settlement, Mr. Walsh paid $20 million in restitution to Tyco on December 17, 2002. Our claims against Mr. Walsh are still pending.

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15.    Debt

        Debt at September 30, 2004 and 2003 is as follows⁽¹⁾ ($ in millions):

	2004		2003
6.0% notes due 2003	$	—	$	73
5.875% public notes due 2004(2)		400		400
4.375% Euro denominated notes due 2004(2)		616		573
6.375% public notes due 2005(2)		750		749
6.75% notes due 2005(2)		77		77
6.375% public notes due 2006		999		998
Variable rate unsecured revolving credit facility due 2006		—		2,000
5.8% public notes due 2006		699		697
6.125% Euro denominated public notes due 2007		738		687
6.5% notes due 2007		100		100
2.75% convertible senior debentures with a 2008 put option		2,483		3,000
6.125% public notes due 2008		399		399
8.2% notes due 2008		85		389
5.5% Euro denominated notes due 2008		842		784
6.125% public notes due 2009		398		398
Zero coupon convertible subordinated debentures due 2010		24		27
6.75% public notes due 2011		999		998
6.375% public notes due 2011		1,500		1,500
6.5% British pound denominated public notes due 2011		361		331
6.0% notes due 2013		996		—
7.0% debentures due 2013		86		86
3.125% convertible senior debentures with a 2015 put option		1,500		1,500
Zero coupon convertible senior debentures due 2020		2		2,476
Zero coupon convertible senior debentures due 2021		1		1
7.0% public notes due 2028		497		497
6.875% public notes due 2029		789		789
6.5% British pound denominated public notes due 2031		514		470
Other(2)		878		966
Total debt		16,733		20,965
Less current portion		2,116		2,714
Long-term debt	$	14,617	$	18,251

⁽¹⁾

Debt maturity dates are presented on a calendar basis, consistent with the respective offering documents.

⁽²⁾

These notes, plus $273 million of the amount shown as other, comprise the current portion of long-term debt as of September 30, 2004.

        In November 2003, Tyco International Group S.A. ("TIGSA") issued $1.0 billion 6.0% notes due 2013 in a private placement offering. The notes are fully and unconditionally guaranteed by Tyco. The net proceeds of approximately $988 million were used to repay a portion of the $2.0 billion outstanding under the 5-year revolving credit facility due 2006. These notes were subsequently exchanged for registered notes with substantially identical terms in an exchange offer that expired on May 3, 2004.

        In November 2003, holders of principal amount at maturity of $3,197 million of zero coupon convertible senior debentures due 2020 notified Tyco that they had exercised their option to require Tyco to repurchase their debentures at a price of $775.66 per $1,000 principal at maturity, representing

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the accreted value of the debentures on that date. On November 18, 2003, Tyco repurchased these debentures for cash of $2,480 million.

        In December 2003, TIGSA entered into a $1.0 billion 364-day revolving bank credit facility, which includes a one year term-out option, and a $1.5 billion 3-year revolving bank credit facility. These facilities have variable interest rate based on LIBOR. The margin over LIBOR payable by TIGSA can vary based on changes in its credit rating. These new facilities replaced the $1.5 billion undrawn 364-day revolving credit facility, which had been due to expire in January 2004, and the $2.0 billion drawn 5-year revolving credit facility, which had been due to expire in February 2006. As of September 30, 2004, there were no outstanding borrowings under either facility. The $1.0 billion 364-day revolving credit facility expires on December 20, 2004, and the Company expects that the facility will be replaced by a $1.0 billion 5-year revolving credit facility prior to its expiration. The $1.5 billion 3-year revolving credit facility expires on December 22, 2006.

        In June 2004, TIGSA entered into a $500 million 3-year unsecured letter of credit facility. The facility provides for the issuance of letters of credit, supported by a related line of credit facility. TIGSA may only borrow under the line of credit agreement to reimburse the bank for obligations with respect to letters of credit issued under this facility. The covenants under this facility are substantially similar to TIGSA's bank credit facilities entered into during December 2003 and the indenture related to TIGSA's 6.0% notes due 2013 issued in November 2003. TIGSA would pay interest on any outstanding borrowings at a variable interest rate, based on the bank's base rate or the Eurodollar rate, as defined. Upon the occurrence of certain credit events, the interest rate on the outstanding borrowings becomes fixed. The issuance of letters of credit under this facility during 2004 enabled the release of approximately $480 million of restricted cash and investments. As of September 30, 2004 there are no outstanding borrowings under this facility.

        In June 2004, the Company purchased $303 million of its 8.2% notes due 2008 for cash of $341 million, which resulted in a $38 million loss, including unamortized debt issuance costs, on the retirement of debt.

        In the fourth quarter of 2004, the Company repurchased $517 million of its outstanding 2.75% convertible senior debentures with a 2008 put option. The total purchase price paid was $750 million and the repurchase resulted in a $241 million loss on the retirement of debt, including the write-off of unamortized debt issuance costs.

        The Company's bank credit agreements contain a number of financial covenants, such as a limit on the ratio of debt to earnings before interest, income taxes, depreciation, and amortization and minimum levels of net worth, and other covenants that limit the Company's ability to pledge assets and to make substantial payments in connection with its capital shares. At September 30, 2004, the Company had three synthetic lease facilities, of which one has since expired on December 10, 2004, with other covenants, including interest coverage and leverage ratios. The Company's outstanding indentures contain customary covenants including limits on negative pledges, subsidiary debt and sale/leaseback transactions. None of these covenants are presently considered restrictive to the Company's operations. The Company is currently in compliance with all of its debt covenants.

        The fair value of debt was approximately $19,392 million (book value of $16,733 million) and $21,652 million (book value of $20,965 million) at September 30, 2004 and 2003, respectively, based on discounted cash flow analyses using current market interest rates.

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        The aggregate amounts of total debt maturing during the next five years are as follows (in millions): $2,116 in 2005, $2,026 in 2006, $764 in 2007, $2,608 in 2008, $1,648 in 2009 and $7,571 thereafter.

        The weighted-average rate of interest on total debt was 5.4% and 4.9% at September 30, 2004 and 2003, respectively. The weighted-average rate of interest on all variable debt was 6.2% and 5.9% at September 30, 2004 and 2003, respectively. The impact of the Company's interest rate swap agreements on reported interest expense was a reduction of $66 million, zero and $116 million and for 2004, 2003 and 2002, respectively.

16.    Guarantees

        Certain of the Company's business segments have guaranteed the performance of third-parties and provided financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from 2005 through the completion of such transactions. The guarantees would be triggered in the event of nonperformance and the potential exposure for nonperformance under the guarantees would not have a material effect on the Company's financial position, results of operations or cash flows.

        In disposing of assets or businesses, the Company often provides representations, warranties and/or indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. The Company does not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, the Company has no reason to believe that these uncertainties would have a material adverse effect on the Company's financial position, annual results of operations or cash flows.

        The Company has recorded liabilities for known indemnifications included as part of environmental liabilities. See Note 18 for a discussion of these liabilities.

        The Company has guaranteed the fair value of certain vessels not to exceed $235 million, and as of September 30, 2004 expects the obligation to be $54 million, which is recorded in the accompanying Consolidated Balance Sheets, based on its estimate of the fair value of the vessels (see Note 18).

        As a result of exiting certain facilities as part of restructuring and acquisition plans, or otherwise, the Company continues to lease certain properties which it has vacated but has sub-let to third parties. In the event the third parties vacate the premises, the Company would be legally obligated under master lease arrangements. The Company believes that the financial risk of default by sub-lessors is not material, individually and in the aggregate, to the Company's financial position, results of operations or cash flows.

        In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company's financial position, results of operations or cash flows.

        The Company generally records estimated product warranty costs at the time of sale. For further information on estimated product warranty, see Note 1.

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        Following is a roll forward of the Company's warranty accrual for the year ended September 30, 2004 ($ in millions):

Balance at September 30, 2003	$	378
Accruals for warranties issued during the year		45
Changes in estimates related to pre-existing warranties		5
Settlements made		(140	)
Foreign currency translation		4
Balance at September 30, 2004	$	292

        Settlements made include spending of $78 million by Engineered Products and Services in connection with a Voluntary Replacement Program ("VRP") associated with the acquisition of Central Sprinkler. The VRP was initiated in 2001 and relates to the recall of certain Model GB fire sprinkler heads which were originally manufactured by Central Sprinkler. Identification and investigation of problems with the sprinkler heads commenced prior to Tyco's acquisition. All affected sprinkler heads are replaced over a 5-7 year period free of charge to property owners.

17.    Financial Instruments

        The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, long-term investments, accounts payable, debt and derivative financial instruments. The fair value of cash and cash equivalents, accounts receivable, long-term investments, accounts payable and derivative financial instruments approximated book value at September 30, 2004 and 2003. See Note 15 for the fair value estimates of debt.

        All derivative financial instruments are reported on the Consolidated Balance Sheets at fair value, and changes in a derivative's fair value are recognized currently in earnings unless specific hedge criteria are met.

Interest Rate Exposures

        The Company enters into interest rate swap agreements to manage its exposure to interest rate risk. Under these agreements, the Company receives fixed rates of interest ranging from 6% to 6.75% and pays floating rates of interest based on six month LIBOR. At September 30, 2004, the Company had interest rate swaps in a net gain position of $53 million designated as fair value hedges with expiration dates in 2011 and 2013. The mark-to-market effects of both the interest rate swap agreements and the underlying debt obligations were recorded in interest expense and are directly offsetting to the extent the hedges are effective. As a result, the impact on income due to ineffectiveness was not significant.

Foreign Currency Exposures

        The Company hedges its net investment in certain foreign operations. Included in the cumulative translation adjustment component of other comprehensive income was a net loss of $194 ($142 after tax) at September 30, 2004.

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        The Company uses forward agreements to hedge its exposure to foreign currency exchange rates on raw material purchases. These forward agreements are designated as cash flow hedges. Gains and losses resulting from these hedges, the amounts of which are not material in any period presented, are recorded in other comprehensive income. Amounts are reclassified from other comprehensive income to earnings and recorded as an adjustment to cost of sales when the underlying transaction impacts earnings.

        Tyco uses various options, swaps, cross-currency swaps and forwards not designated as hedging instruments, to manage foreign currency exposures on accounts and notes receivable, accounts payable, intercompany loan balances and forecast transactions denominated in certain foreign currencies. At September 30, 2004, the Company had recorded net assets of $78 million related to these transactions.

18.    Commitments and Contingencies

        The Company has facility, vehicle and equipment leases that expire at various dates through the year 2050. Rental expense under these leases and leases for equipment was $790 million, $848 million and $837 million for 2004, 2003 and 2002, respectively. At September 30, 2004, the minimum lease payment obligations under non-cancelable operating leases were as follows: $658 million in 2005, $529 million in 2006, $377 million in 2007, $273 million in 2008, $212 million in 2009 and an aggregate of $862 million in years 2010 through 2050. These payments include obligations under an off-balance sheet leasing arrangement for five cable laying sea vessels. Upon expiration of this lease in October 2006, a subsidiary of the Company has the option to buy these vessels for approximately $280 million, or return the vessels to the lessor and, under a residual guarantee, pay any shortfall in sales proceeds to the lessor from a third party in an amount not to exceed $235 million. As of September 30, 2004, the Company expects this obligation to be $54 million, which is recorded in the accompanying Consolidated Balance Sheets, based on an estimate of the fair value of the vessels performed by management with the assistance of a third-party valuation. During 2004, 2003 and 2002, the Company incurred expenses of $14 million, $11 million and $2 million, respectively, related to this expected obligation.

        At September 30, 2004, the Company had a contingent liability of $80 million related to the 2001 acquisition of Com-Net by Electronics. This represents the maximum amount payable to the former shareholders of Com-Net only after the construction and installation of a communications system for the State of Florida is finished and the State has approved the system based on the guidelines set forth in the contract. No provision has been made in Tyco's Consolidated Financial Statements as the outcome of this contingency cannot be reasonably determined.

        In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company's financial position, results of operations or cash flows.

Class Actions

        As a result of actions taken by the Company's former senior corporate management, Tyco, some members of the Company's former senior corporate management, former members of our Board of Directors and the Company's current Chief Executive Officer are named defendants in a number of purported class actions alleging violations of the disclosure provisions of the federal securities laws. Tyco, certain of the Company's current and former employees, some members of the Company's former

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senior corporate management and some former members of the Company's Board of Directors also are named as defendants in several Employee Retirement Income Security Act ("ERISA") class actions. In addition, Tyco and some members of the Company's former senior corporate management are subject to a SEC inquiry, and some members of the Company's former senior corporate management are named as defendants in criminal cases being prosecuted by the District Attorney of New York County. The findings and outcomes of the prosecutions and the SEC civil action may affect the course of the purported securities class actions and ERISA class actions pending against Tyco. The Company is generally obligated to indemnify its directors and officers and its former directors and officers who are named as defendants in some or all of these matters to the extent required by Bermuda law. In addition, the Company's insurance carriers may decline coverage, or the Company's coverage may be insufficient to cover its expenses and liability, in some or all of these matters. The Company is unable at this time to estimate what its ultimate liability in these matters may be, and it is possible that the Company will be required to pay judgments or settlements and incur expenses, in excess of any insurance coverage, in aggregate amounts that would have a material adverse effect on its financial position, results of operations or cash flows. At this time, it is not possible to estimate the amount of loss or probable losses, if any, that might result from an adverse resolution of these matters.

Investigation

        The Company and others have received subpoenas and requests from the SEC's Division of Enforcement, the District Attorney of New York County, the Department of Labor and others seeking the production of voluminous documents in connection with various investigations into the Company's governance, management, operations, accounting and related controls. Certain current and former employees in Fire and Security received subpoenas from the SEC's Division of Enforcement seeking testimony related to past accounting practices for the ADT dealer connect fees. As previously reported in the Company's periodic filings, these practices have been discontinued. The Department of Labor is investigating Tyco and the administrators of certain of the Company's benefit plans. The Company cannot predict when these investigations will be completed, nor can the Company predict what the results of these investigations may be. It is possible that the Company will be required to pay material fines, consent to injunctions on future conduct, lose the ability to conduct business with government instrumentalities (which in turn could negatively impact the Company's business with non-governmental customers) or suffer other penalties, each of which could have a material adverse effect on the Company's business. It is not possible to estimate the amount of loss, or range of possible loss, if any, that might result from an adverse resolution of these matters.

Intellectual Property Litigation

Mallinckrodt, Inc. ("Mallinckrodt") and Nellcor Puritan Bennett, Inc. ("Nellcor"), plaintiffs/counter-defendants v. Masimo Corporation ("Masimo") et al., defendants/counter-claimants, is a consolidated patent infringement action in the United States District Court for the Central District of California. Nellcor alleges that Masimo infringed one Nellcor patent related to pulse oximeters, which are medical devices used to measure blood oxygen levels in patients, and Masimo alleges that Nellcor infringed four Masimo patents related to pulse oximeters. Trial in the action commenced on February 18, 2004. On March 16, 2004, the jury returned a liability finding that Nellcor willfully infringed the four Masimo patents and that Masimo did not infringe the one Nellcor patent. On March 26, 2004, the jury awarded Masimo $134.5 million in damages for Nellcor's alleged infringement through December 31, 2003.

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After hearing post-trial motions, the district court issued an order on July 14, 2004 which (i) denied Masimo's request to impose an injunction on the sale of pulse oximeters; (ii) reversed the jury finding of patent infringement for one of the four patents at issue; (iii) ruled that a second patent was unenforceable due to Masimo's inequitable conduct in seeking the patent; and (iv) overturned the jury finding that the infringement was "willful." On August 6, 2004, the district court entered final judgment that included additional damages of $29.5 million for Nellcor's alleged infringement from January 1, 2004 through May 31, 2004. Nellcor is appealing the jury's infringement finding on the remaining two Masimo patents to the United States Court of Appeals for the Federal Circuit. The briefing for the appeal is scheduled to be completed by February 28, 2005. The Court of Appeals has not yet scheduled oral argument for the appeal. Tyco has assessed the status of this matter and has concluded that it is more likely than not that the jury's decision will be overturned and, further, Tyco intends to vigorously pursue all available means to achieve such reversal. Accordingly, no provision has been made in Tyco's Consolidated Financial Statements with respect to this damage award.

Masimo Corporation v. Tyco Healthcare Group LP ("Tyco Healthcare") and Mallinckrodt, Inc. is a separate lawsuit also pending in the United States District Court for the Central District of California. Tyco Healthcare and Mallinckrodt are subsidiaries of Tyco. In this lawsuit, Masimo alleges violations of antitrust laws against Tyco Healthcare and Mallinckrodt in the markets for pulse oximeter products. Masimo alleges that Tyco Healthcare and Mallinckrodt used their market position to prevent hospitals from purchasing Masimo's pulse oximetry products. Masimo seeks injunctive relief and monetary damages, including treble damages. Trial is scheduled to begin on February 22, 2005. At this time, Tyco cannot predict the outcome of the antitrust case and, therefore, it is not possible to estimate the amount of loss or the range of potential losses that might result from an adverse judgment or settlement in this matter. It is possible that Tyco will be required to pay an award of damages in the antitrust lawsuit.

Applied Medical Resources Corp. ("Applied Medical") v. United States Surgical ("U.S. Surgical") is a patent infringement action in which U.S. Surgical, a subsidiary of Tyco, is the defendant. In February 2002, the United States District Court for the Central District of California held that U.S. Surgical's VERSASEAL universal seal system, contained in certain surgical trocar and access devices manufactured by U.S. Surgical, infringed certain of the plaintiff's patents. The district court entered a permanent injunction against U.S. Surgical based upon infringement of one of the three patents involved in the suit. The United States Court of Appeals for the Federal Circuit affirmed the district court's permanent injunction ruling in September 2003 for the VERSASEAL product, which is no longer on the market. In October 2003, the district court ruled in U.S. Surgical's favor, holding that two other patents involved in the case were invalid. A trial on damages for the earlier infringement ruling in the district court concluded on July 27, 2004. The jury awarded Applied Medical $43.5 million in damages and returned a finding that the earlier infringement was willful, giving the district court discretion to enhance those damages to up to treble the damages awarded to Applied Medical by the jury. On October 1, 2004, the district court issued post-trial rulings that (i) denied U.S. Surgical's motion to set aside the jury's finding on willfulness; and (ii) granted Applied Medical's motion for enhanced damages, enhancing the jury's damages award by 25%, or $11 million. The district court will also consider during post trial proceedings what pre-judgment interest, if any, should be awarded, and whether Applied Medical is entitled to an award of attorneys' fees. After the proceedings are completed at the district court, U.S. Surgical will appeal the damages award and the willfulness finding

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to the court of appeals. Tyco has recorded a liability related to this matter, and does not expect to incur material losses beyond what has already been accrued.

        On July 31, 2003, Applied Medical filed another patent infringement suit against U.S. Surgical in the United States District Court for the Central District of California. The complaint alleges that U.S. Surgical's VERSASEAL Plus trocar product infringes Applied Medical's U.S. Patent No. 5,385,533. Applied Medical seeks injunctive relief and unspecified monetary damages, including enhanced damages for alleged willful infringement. Applied Medical filed a motion for a preliminary injunction, which the district court denied on December 23, 2003. Trial is currently scheduled to commence in March 2005. At this time, Tyco cannot predict the outcome of this patent infringement case and, therefore, it is not possible to estimate the amount of loss or range of potential losses that might result from an adverse judgment or settlement in this matter.

Environmental

        Tyco is involved in various stages of investigation and cleanup related to environmental remediation matters at a number of sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations and alternative cleanup methods. As of September 30, 2004, Tyco concluded that it was probable that it would incur remedial costs in the range of approximately $167 million to $443 million. As of September 30, 2004, Tyco concluded that the best estimate within this range is approximately $265 million, of which $42 million is included in accrued and other current liabilities and $223 million is included in other liabilities on our Consolidated Balance Sheets. In view of the Company's financial position and reserves for environmental matters of $265 million, the Company believes that any potential payment of such estimated amounts will not have a material adverse effect on its financial position, results of operations or cash flows.

Asbestos

        Like many other companies, Tyco and some of its subsidiaries are named as defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials. Consistent with the national trend of increased asbestos-related litigation, the Company has observed an increase in the number of these lawsuits in the past several years. The majority of these cases have been filed against subsidiaries in Healthcare and Engineered Products and Services. A limited number of the cases allege premises liability, based on claims that individuals were exposed to asbestos while on a subsidiary's property. A majority of the cases involve product liability claims, based principally on allegations of past distribution of heat-resistant industrial products incorporating asbestos or the past distribution of industrial valves that incorporated asbestos-containing gaskets or packing. Each case typically names between dozens to hundreds of corporate defendants.

        Tyco's involvement in asbestos cases has been limited because its subsidiaries did not mine or produce asbestos. Furthermore, in the Company's experience, a large percentage of these claims were never substantiated and have been dismissed by the courts. The Company will continue to vigorously defend these lawsuits and the Company has not suffered an adverse verdict in a trial court proceeding related to asbestos claims.

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TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        When appropriate, the Company settles claims. However, the total amount paid to date to settle and defend all asbestos claims has been immaterial. As of September 30, 2004, there were approximately 14,500 asbestos liability cases pending against us and our subsidiaries.

        The Company believes that it and its subsidiaries have substantial indemnification protection and insurance coverage, subject to applicable deductibles, with respect to asbestos claims. These indemnitors and the relevant carriers typically have been honoring their duty to defend and indemnify. The Company believes that it has valid defenses to these claims and intends to continue to defend them vigorously. Additionally, based on the Company's historical experience in asbestos litigation and an analysis of the Company's current cases, the Company believes that it has adequate amounts recorded for potential settlements and adverse judgments in asbestos-related litigation. While it is not possible at this time to determine with certainty the ultimate outcome of these asbestos-related proceedings, the Company believes that the final outcome of all known and anticipated future claims, after taking into account its substantial indemnification rights and insurance coverage, will not have a material adverse effect on the Company's financial position, results of operations or cash flows.

Other Matters

        The Company is a defendant in a number of other pending legal proceedings incidental to present and former operations, acquisitions and dispositions. The Company does not expect the outcome of these proceedings, either individually or in the aggregate, to have a material adverse effect on its financial position, results of operations or cash flows.

        As new internal controls and procedures are implemented, any reported allegations or violations of the Company's guide to ethical conduct are investigated and appropriate disciplinary and remedial measures are taken. An allegation was brought to the Company's attention that during the period from 1999 through 2003 certain improper payments were made by a non-U.S. subsidiary of Tyco with 2004 revenue of $40 million. With the assistance of outside counsel, the Company conducted an internal investigation into these allegations and whether certain payments were correctly recorded in the books and records of the subsidiary. The Company has taken remedial steps and have reported the results of its investigation to the Department of Justice and the SEC and are cooperating with their inquiry. The Company does not believe this matter will have a material adverse effect on the Company's financial position, results of operations or cash flows.

19.    Retirement Plans

Defined Benefit Pension Plans—The Company has a number of noncontributory and contributory defined benefit retirement plans covering certain of its U.S. and non-U.S. employees, designed in accordance with conditions and practices in the countries concerned. Net periodic pension benefit cost is based on periodic actuarial valuations which use the projected unit credit method of calculation and is charged to the Consolidated Statements of Operations on a systematic basis over the expected average remaining service lives of current participants. Contribution amounts are determined based on the advice of professionally qualified actuaries in the countries concerned. The benefits under the defined benefit plans are based on various factors, such as years of service and compensation. The following tables exclude amounts related to discontinued operations for all periods presented. The Company uses a September 30 measurement date for all of its pension plans.

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        The net periodic benefit cost for all U.S. and non-U.S. defined benefit pension plans for the years ended September 30, 2004, 2003 and 2002 is as follows ($ in millions):

		U.S. Plans									Non-U.S. Plans
		2004			2003			2002			2004			2003			2002
Service cost		$	26		$	25		$	19		$	103		$	85		$	69
Interest cost			129			131			134			123			101			88
Expected return on plan assets			(114	)		(99	)		(123	)		(86	)		(75	)		(82	)
Amortization of initial net (asset) obligation			(1	)		(1	)		(1	)		—			1			—
Amortization of prior service cost			3			3			1			1			1			1
Amortization of net actuarial loss			47			39			9			52			43			15
Curtailment/settlement loss and special termination benefits			3			10			3			5			10			—
	Net periodic benefit cost	$	93		$	108		$	42		$	198		$	166		$	91
Weighted-average assumptions used to determine net pension cost during the period:
Discount rate			6.00	%		6.75	%		7.50	%		4.85	%		5.09	%		5.71	%
Expected return on plan assets			8.00	%		8.49	%		8.74	%		6.29	%		6.89	%		7.37	%
Rate of compensation increase			4.30	%		4.27	%		4.60	%		3.42	%		3.49	%		3.74	%

        The following table represents the changes in benefit obligations, plan assets and the net amount recognized on the Consolidated Balance Sheets for all U.S. and non-U.S. defined benefit plans at September 30, 2004 and 2003 ($ in millions):

		U.S. Plans						Non-U.S. Plans
		2004			2003			2004			2003
Change in benefit obligations:
Benefit obligation at beginning of year		$	2,244		$	2,048		$	2,414		$	1,938
Service cost			26			26			103			85
Interest cost			129			131			123			101
Employee contributions			—			—			11			11
Plan amendments			1			1			—			1
Actuarial (gain) loss			(20	)		221			44			160
Benefits and administrative expenses paid			(142	)		(153	)		(79	)		(71	)
Acquisitions			—			—			3			18
Plan settlements, curtailments and special termination benefits			(15	)		(30	)		(20	)		(28	)
Currency translation			—			—			172			199
	Benefit obligation at end of year	$	2,223		$	2,244		$	2,771		$	2,414

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Change in plan assets:
Fair value of plan assets at beginning of year		$	1,504		$	1,254		$	1,263		$	1,040
Actual return on plan assets			130			183			137			119
Employer contributions			510			249			186			93
Employee contributions			—			—			11			11
Acquisitions			—			—			—			5
Plan settlements, curtailments and special termination benefits			(9	)		(29	)		(24	)		(32	)
Benefits and administrative expenses paid			(142	)		(153	)		(79	)		(71	)
Currency translation			—			—			97			98
	Fair value of plan assets at end of year	$	1,993		$	1,504		$	1,591		$	1,263
Funded status		$	(230	)	$	(740	)	$	(1,180	)	$	(1,151	)
Unrecognized net actuarial loss			660			751			858			859
Unrecognized prior service cost			26			29			4			5
Unrecognized transition asset			—			(1	)		(6	)		(6	)
	Net amount recognized	$	456		$	39		$	(324	)	$	(293	)
Amounts recognized on the Consolidated Balance Sheets:
Prepaid benefit cost		$	4		$	4		$	99		$	27
Accrued benefit liability			(224	)		(712	)		(915	)		(852	)
Intangible asset			16			21			5			7
Accumulated other comprehensive income			660			726			487			525
	Net amount recognized	$	456		$	39		$	(324	)	$	(293	)
Weighted-average assumptions used to determine pension benefit obligations at year end:
Discount rate			6.00	%		6.00	%		4.90	%		4.85	%
Rate of compensation increase			4.25	%		4.30	%		3.61	%		3.42	%

        In determining the expected return on plan assets, the Company considers the relative weighting of plan assets by class and individual asset class performance expectations as provided by its external advisors.

        The Company's investment strategy for its pension plans is to manage the plans on a going-concern basis. Current investment policy is to achieve a superior return on assets, subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for participants. For U.S. pension plans, this policy targets a 60% allocation to equity securities and a 40% allocation to debt securities. Various asset allocation strategies are in place for non-U.S. pension plans, with a weighted-average target allocation of 57% to equity securities, 32% to debt securities and 11% to other asset classes, including real estate and cash equivalents.

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        Pension plans have the following weighted-average asset allocations at September 30, 2004 and 2003:

		U.S. Plans				Non-U.S. Plans
		2004		2003		2004		2003
Asset Category:
Equity securities		54	%	55	%	57	%	59	%
Debt securities		35	%	44	%	32	%	33	%
Real estate		—		—		3	%	2	%
Cash and cash equivalents		11	%	1	%	8	%	6	%
	Total	100	%	100	%	100	%	100	%

        The Company made significant voluntary contributions on September 30, 2004 that were held in cash and cash equivalents on that date, which increased the cash and cash equivalent asset allocation percentage to 11% for the U.S. plans at September 30, 2004.

        Although the Company does not buy or sell any of its own stock as a direct investment for its pension funds, due to external investment management of the funds, the plans may indirectly hold Tyco stock. The aggregate amount of the shares would not be considered material relative to the total fund assets.

        The Company's funding policy is to make contributions in accordance with the laws and customs of the various countries in which it operates as well as to make discretionary voluntary contributions from time-to-time. The Company anticipates that at a minimum it will make the minimum required contributions to its pension plans in 2005 of $9 million for the U.S. plans and $185 million for non-U.S. plans.

        Benefit payments, including those amounts to be paid out of corporate assets and reflecting future expected service as appropriate, are expected to be paid as follows ($ in millions):

	U.S. Plans		Non-U.S. Plans
2005	$	142	$	76
2006		131		78
2007		136		85
2008		141		99
2009		144		103
2010–2014		778		641

        The accumulated benefit obligation for all U.S. plans as of September 30, 2004 and 2003 was $2,210 and $2,208, respectively. The accumulated benefit obligation for all non-U.S. plans as of September 30, 2004 and 2003 was $2,361 and $2,046, respectively.

        The accumulated benefit obligation and fair value of plan assets for U.S. pension plans with accumulated benefit obligations in excess of plan assets were $2,201 million and $1,984 million, respectively, at September 30, 2004 and $2,201 million and $1,496 million, respectively, at September 30, 2003.

        The accumulated benefit obligation and fair value of plan assets for non-U.S. pension plans with accumulated benefit obligations in excess of plan assets were $2,214 million and $1,346 million, respectively, at September 30, 2004 and $1,936 million and $1,134 million, respectively, at September 30, 2003.

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        The Company also participates in a number of multi-employer defined benefit plans on behalf of certain employees. Pension expense related to multi-employer plans was $13 million, $14 million and $10 million in 2004, 2003 and 2002, respectively.

Executive Retirement Arrangements—Messrs. Kozlowski and Swartz participated in individual Executive Retirement Arrangements maintained by Tyco (the "ERA"). Under the ERA, Messrs. Kozlowski and Swartz would have fixed lifetime benefits commencing at their normal retirement age of 65. The Company's accrued benefit obligations for Messrs. Kozlowski and Swartz as of September 30, 2004 were $58 million and $30 million, respectively. The Company's accrued benefit obligations for Messrs. Kozlowski and Swartz as of September 30, 2003 were $54 million and $28 million, respectively. Retirement benefits are available at earlier ages and alternative forms of benefits can be elected. Any such variations would be actuarially equivalent to the fixed lifetime benefit starting at age 65. Amounts owed to Messrs. Kozlowski and Swartz under the ERA are in dispute by the Company. For further information, see Note 14.

Defined Contribution Retirement Plans—The Company maintains several defined contribution retirement plans, which include 401(k) matching programs, as well as qualified and nonqualified profit sharing and share bonus retirement plans. Expense for the defined contribution plans is computed as a percentage of participants' compensation and was $152 million, $184 million and $180 million for 2004, 2003 and 2002, respectively. The Company also maintains an unfunded Supplemental Executive Retirement Plan ("SERP"). This plan is nonqualified and restores the employer match that certain employees lose due to IRS limits on eligible compensation under the defined contribution plans. Expense related to the SERP was $3 million, $4 million and $16 million in 2004, 2003 and 2002, respectively.

Deferred Compensation Plans—The Company has nonqualified deferred compensation plans, which permit eligible employees to defer a portion of their compensation. A record keeping account is set up for each participant and the participant chooses from a variety of measurement funds for the deemed investment of their accounts. The measurement funds correspond to a number of funds in the Company's 401(k) plans and the account balance fluctuates with the investment returns on those funds. Deferred compensation expense was $15 million, $17 million and $16 million in 2004, 2003 and 2002, respectively. Total deferred compensation liabilities were $158 million, $189 million and $182 million at September 30, 2004, 2003 and 2002, respectively.

Rabbi Trust—The Company has established a rabbi trust to fund deferred compensation and SERP liabilities that is currently funded primarily through corporate-owned life insurance policies. The rabbi trust assets, which are consolidated, are available to pay plan benefits and are subject to the claims of the Company's creditors in the event of the Company's insolvency. The cash surrender value of these policies, net of outstanding loans, included in other noncurrent assets on the Consolidated Balance Sheets were $210 million, $232 million and $316 million at September 30, 2004, 2003 and 2002, respectively. At the September 30, 2004, the rabbi trust also held $32 million of cash. The employees are general creditors of the Company with respect to these benefits.

Postretirement Benefit Plans—The Company generally does not provide postretirement benefits other than pensions for its employees. However, certain acquired operations provide these benefits to employees who were eligible at the date of acquisition, and a small number of U.S. and Canadian operations provide on-going eligibility for such benefits. The following tables exclude amounts related to discontinued operations for all periods presented. The Company uses a September 30 measurement date for all of its postretirement benefit plans.

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TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        Net periodic postretirement benefit cost for the years ended September 30, 2004, 2003 and 2002 is as follows ($ in millions):

		2004			2003			2002
Service cost		$	2		$	2		$	2
Interest cost			21			23			22
Amortization of prior service credit			(5	)		(3	)		(4	)
Amortization of net actuarial loss			8			7			—
Curtailment/Settlement gain			(3	)		(2	)		—
	Net periodic postretirement benefit cost	$	23		$	27		$	20
Weighted-average assumptions used to determine net postretirement benefit cost during the period:
Discount rate			5.52	%		6.75	%		7.50	%
Rate of compensation increase			4.25	%		4.25	%		4.60	%

        The components of the accrued postretirement benefit obligations, substantially all of which are unfunded, at September 30, 2004 and 2003, are as follows ($ in millions):

		2004			2003
Change in benefit obligations:
Benefit obligation at beginning of year		$	398		$	355
Service cost			2			2
Interest cost			21			24
Plan amendments			(3	)		(14	)
Actuarial loss			—			71
Benefits paid			(29	)		(36	)
Plan curtailments			(1	)		(5	)
Currency translation			1			1
	Benefit obligation at end of year	$	389		$	398
Change in plan assets:
Fair value of assets at beginning of year		$	5		$	5
Employer contributions			28			36
Benefits paid			(29	)		(36	)
Actual return on plan assets			1			—
	Fair value of plan assets at end of year	$	5		$	5
Funded status		$	(384	)	$	(393	)
Unrecognized net loss			102			110
Unrecognized prior service cost			(32	)		(36	)
	Accrued postretirement benefit cost	$	(314	)	$	(319	)
Weighted-average assumptions used to determine postretirement benefit obligations at year end:
Discount rate			5.52	%		5.52	%
Rate of compensation increase			4.25	%		4.25	%

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        The Company expects to make contributions to its postretirement benefit plans of $33 million in 2005.

        Benefit payments, including those amounts to be paid out of corporate assets and reflecting future expected service as appropriate, are expected to be paid as follows ($ in millions):

2005	$	34
2006		33
2007		33
2008		31
2009		29
2010–2014		143

        For measurement purposes, for the years ended September 30, 2004 and 2003, a 12.71% and 11.55% composite annual rate of increase in the per capita cost of covered health care benefits was assumed, respectively. At September 30, 2003, the rate was assumed to decrease gradually to 5.00% by the year 2011 and remain at that level thereafter. At September 30, 2004, the composite annual rate of increase in health care benefit costs was assumed to decrease gradually to 5.00% by the year 2013 and remain at that level thereafter. A one-percentage-point change in assumed healthcare cost trend rates would have the following effects ($ in millions):

	1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on total of service and interest cost	$	2	$	(2	)
Effect on postretirement benefit obligation		25		(22	)

20.    Shareholders' Equity

        Preference Shares—Tyco has authorized 125,000,000 preference shares, par value of $1 per share, at September 30, 2004 and 2003, of which none and one such share, respectively, was issued and outstanding. The one preference share was designated a special voting preference share in connection with the purchase of CIT in June 2001. This preference share provided a mechanism by which the holders of outstanding exchangeable shares exercised their voting, dividend and liquidation rights, which were equivalent to those of Tyco common shareholders, except that each exchangeable share was equivalent to 0.6907 of a Tyco common share. In connection with the IPO of CIT, the exchangeable shares were redeemed effective July 5, 2002 through the issuance of 3,243,322 Tyco common shares. As a result, no one was entitled to exercise the rights attaching to the preference share.

        Rights as to dividends, return of capital, redemption, conversion, voting and otherwise with respect to the preference shares may be determined by Tyco's Board of Directors on or before the time of issuance. In the event of the liquidation of the Company, the holders of any preference shares then outstanding would be entitled to payment to them of the amount for which the preference shares were subscribed and any unpaid dividends prior to any payment to the common shareholders.

        Dividends—Tyco has paid a quarterly cash dividend of $0.0125 per common share since July 1997.

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        Shares Owned by Subsidiaries—Shares owned by subsidiaries are treated as treasury shares and are recorded at cost.

21.    Share Plans

        As of January 1, 2004, the Tyco International Ltd. 2004 Stock and Incentive Plan (the "2004 Plan") became effective due to affirmative vote of a majority of the common shares represented in person or by proxy at the 2004 Annual General Meeting. The 2004 Plan replaces the Tyco International Ltd. Long Term Incentive Plan, as amended as of May 12, 1999 (the "LTIP I Plan"), the Tyco International Ltd. Long Term Incentive Plan II (the "LTIP II Plan"), as well as Tyco International Ltd. 1994 Restricted Stock Ownership Plan for Key Employees (the "1994 Plan") for all awards effective on and after March 25, 2004. The 2004 Plan provides for the award of stock options, stock appreciation rights, annual performance bonuses, long term performance awards, restricted units, restricted stock, deferred stock units, promissory stock and other stock-based awards (collectively, "Awards").

        The 2004 Plan provides for a maximum of 160 million common shares to be issued as Awards, subject to adjustment as provided under the terms of the 2004 Plan. In addition, any common shares that have been approved by the Company's shareholders for issuance under the 1994 Plan and the LTIP Plans but which have not been awarded thereunder as of January 1, 2004, reduced by the number of common shares related to Awards made under the LTIP Plans between January 1, 2004 and the date the 2004 Plan was approved by shareholders, (or which have been awarded but will not be issued, owing to expiration, forfeiture, cancellation, return to the Company or settlement in cash in lieu of common shares on or after January 1, 2004) and which are no longer available for any reason (including the termination of the 1994 Plan or the LTIP Plans) will also be available for issuance under the 2004 Plan. When common shares are issued pursuant to a grant of restricted stock, restricted units, deferred stock units, promissory stock, performance units or as payment of an annual performance bonus or other stock-based award, the total number of common shares remaining available for grant will be decreased by a margin of at least 1.8 per common share issued. At September 30, 2004, there were approximately 185 million shares available for future grant under the 2004 Plan (including shares available under both the LTIP I and LTIP II Plans which are now assumable under the 2004 Plan).

        The 1994 Plan provided for the issuance of restricted stock grants to officers and non-officer employees. The number of shares available for issuance under the 1994 Plan was reduced to 999,524 in October 2002, but was automatically increased by 10 million shares, or 0.5% of the total common shares outstanding on October 1, 2003, in accordance with the terms of the plan. However, upon effectiveness of the 2004 Plan, the automatic increase in shares available for issuance under the 1994 Plan did not occur on October 1, 2004 and will not occur in the future.

        The LTIP I Plan reserved common shares for issuance to Tyco's directors, executives and managers as share options. This plan is administered by the Compensation Committee of the Board of Directors of the Company, which consists exclusively of independent directors of the Company. Tyco has reserved 140 million common shares for issuance under the LTIP I Plan. At September 30, 2004, there were approximately 28 million shares originally reserved for issuance under this plan but now available for future grant under the 2004 Plan.

        The LTIP II Plan was a broad-based option plan for non-officer employees. Tyco has reserved 100 million common shares for issuance under the LTIP II Plan. The terms and conditions of this plan

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are similar to the LTIP I Plan. At September 30, 2004, there were approximately 18 million shares originally reserved for issuance under this plan but now available for future grant under the 2004 Plan.

        Restricted Shares—Common shares are awarded subject to certain restrictions. Conditions of vesting are determined at the time of grant. The 2004 Plan indicates that, unless otherwise stated, the stock will vest in equal annual installments over a period of four years. However, the majority of Tyco's restricted share grants cliff vest after three years. All restrictions on the stock will lapse upon normal retirement, death or disability of the employee.

        For grants which vest based on certain specified performance criteria, the fair market value of the shares at the date of vesting is expensed over the period of performance, once achievement of criteria is deemed probable. For grants that vest through passage of time, the fair market value of the shares at the time of the grant is amortized (net of income tax benefit) to expense over the period of vesting. Unamortized compensation expense is recorded as a reduction of shareholders' equity. Recipients of all restricted shares have the right to vote such shares and receive dividends. Income tax benefits resulting from the vesting of restricted shares, including a deduction for the excess, if any, of the fair market value of restricted shares at the time of vesting over their fair market value at the time of the grants and from the payment of dividends on unvested shares, are credited to contributed surplus.

        At September 30, 2004, 19 million shares had been granted, of which 3 million were granted under the 2004 Plan and 16 million were granted under the 1994 Plan.

        Share Options—Options are granted to purchase common shares at prices which are equal to or greater than the market price of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant. The 2004 Plan indicates that, unless otherwise stated, the options will become exercisable in equal annual installments over a period of four years and will generally expire 10 years after the date of grant. However, the majority of Tyco's stock option grants vest in equal annual installments over three years. Options assumed as part of business combination transactions are administered under Tyco's plan but do not reduce the available shares and retain all the rights, terms and conditions of the respective plans under which they were originally granted.

        At September 30, 2004, approximately 372 million share options had been granted, of which 230 million, 124 million and 18 million were granted under the LTIP I, LTIP II and 2004 Plans, respectively.

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        Share option activity for all Tyco plans from September 30, 2001 to September 30, 2004 is as follows:

	Outstanding		Weighted-Average Exercise Price
At September 30, 2001	120,247,037		$	39.44
Assumed from acquisition	10,794,826			83.02
Granted	60,012,080			29.79
Exercised	(8,159,841	)		22.88
Canceled	(29,260,509	)		45.81
At September 30, 2002	153,633,593			37.80
Granted	26,937,609			14.80
Exercised	(1,460,513	)		10.13
Canceled	(30,470,736	)		46.38
At September 30, 2003	148,639,953			32.28
Granted	18,449,148			28.15
Exercised	(8,304,564	)		18.62
Canceled	(16,457,232	)		37.43
At September 30, 2004	142,327,305			31.96

        The following table summarizes information about outstanding and exercisable Tyco options at September 30, 2004:

		Options Outstanding				Options Exercisable
Range of Exercise Prices		Number	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life—Years	Number	Weighted-Average Exercise Price
$0.00 to $10.00		8,335,403	$	9.68	6.9	4,818,736	$	9.44
10.04 to 19.97		27,824,963		15.07	7.6	11,854,327		15.63
20.01 to 30.00		43,641,569		25.60	7.3	20,234,586		24.38
30.16 to 40.00		15,393,130		35.41	4.7	14,355,380		35.49
40.06 to 50.00		29,462,535		44.93	5.9	20,457,787		45.02
50.05 to 60.00		14,483,921		52.68	5.5	14,482,421		52.68
60.11 to 142.42		3,185,784		94.18	5.5	3,185,784		94.18
	Total	142,327,305		31.96	6.6	89,389,021		36.00

        On the dates of grant using the Black-Scholes option-pricing model and assumptions set forth below, the estimated weighted-average fair value of Tyco options granted during 2004, 2003 and 2002 was $10.69, $6.34, and $14.31, respectively.

140

        The following weighted-average assumptions were used for the years ended September 30, 2004, 2003 and 2002:

	2004			2003		2002
Expected stock price volatility		47	%	64	%	52	%
Risk free interest rate		2.56	%	2.48	%	4.03	%
Expected annual dividend per share	$	0.05		$0.05		$0.05
Expected life of options (years)		3.9		4.3		5.0

        Deferred Stock Units—Deferred Stock Units ("DSU's") are notional units that are tied to the value of Tyco common shares with distribution deferred until termination of employment. Distribution, when made, will be in the form of actual shares. Similar to restricted share grants that vest through the passage of time, the fair market value of the DSU's at the time of the grant is amortized to expense over the period of vesting. The unamortized portion of deferred compensation expense is recorded as a reduction of shareholders' equity. Recipients of DSU's do not have the right to vote such shares and do not have the right to receive cash dividends. However, they have the right to receive dividends in the form of additional DSU's. Conditions of vesting are determined at the time of grant. The 2004 Plan indicates that, unless otherwise stated, the DSU's will vest in equal annual installments over four years. However, the majority of Tyco's DSU grants vest in equal annual installments over three years.

        The Company has granted 2 million DSU's, all of which were outstanding at September 30, 2004.

        Employee Stock Purchase Plans—Substantially all full-time employees of the Company's U.S. subsidiaries and employees of certain qualified non-U.S. subsidiaries are eligible to participate in an employee share purchase plan. Eligible employees authorize payroll deductions to be made for the purchase of shares. The Company matches a portion of the employee contribution by contributing an additional 15% of the employee's payroll deduction. All shares purchased under the plan are purchased on the open market by a designated broker.

        The Company also maintains two other employee stock purchase plans for the benefit of employees of certain qualified non-U.S. subsidiaries. Under one plan, eligible employees are granted options to purchase shares at the end of three years of service at 85% of the market price at the time of grant. As of September 30, 2004, there were approximately 3 million options outstanding and 7 million shares available for future issuance under this plan. All shares purchased under the other plan are purchased on the open market.

         The total compensation cost for all stock-based compensation awards was $42 million, $43 million and $90 million for 2004, 2003 and 2002, respectively. Additionally, contributed surplus includes $115 and $46 million of unamortized compensation expense for 2004 and 2003, respectively.

141

22.    Comprehensive Income (Loss)

        The components of accumulated other comprehensive (loss) income are as follows ($ in millions):

		Currency Translation			Unrealized (Loss) Gain on Securities(1)			Unrealized (Loss) Gain on Derivative Financial Instruments			Minimum Pension Liability			Accumulated Other Comprehensive (Loss) Income
Balance at September 30, 2001		$	(1,003	)	$	(79	)	$	(66	)	$	(279	)	$	(1,427	)
	Pretax current period change		159			77			2			(612	)		(374	)
	Income tax (expense) benefit		—			(3	)		—			206			203
	Discontinued operations, net of income taxes		(54	)		—			63			—			9
Balance at September 30, 2002			(898	)		(5	)		(1	)		(685	)		(1,589	)
	Pretax current period change		1,413			4			3			(206	)		1,214
	Income tax (expense) benefit		—			(2	)		—			71			69
	Discontinued operations, net of income taxes		33			—			—			—			33
Balance at September 30, 2003			548			(3	)		2			(820	)		(273	)
	Pretax current period change		679			4			(5	)		104			782
	Income tax (expense) benefit		—			(1	)		1			(18	)		(18	)
	Discontinued operations, net of income taxes		25			—			—			—			25
Balance at September 30, 2004		$	1,252		$	—		$	(2	)	$	(734	)	$	516

⁽¹⁾

The years ended September 30, 2004 and 2002 include a reclassification of unrealized losses for $4 million (no tax impact) and $113 million ($101 million after-tax), respectively, related to the other than temporary impairment of investments.

23.    Consolidated Segment and Geographic Data

       The Company's segments are strategic business units that operate in different industries and are managed separately. Certain corporate expenses were allocated to each operating segment's operating income, based generally on net revenues.

        The Company operates in the following business segments:

•

Fire and Security designs, manufactures, installs, monitors and services electronic security and fire protection systems.



•

Electronics designs, manufactures and distributes electrical and electronic components.



•

Healthcare designs, manufactures and distributes medical devices and supplies, imaging agents, pharmaceuticals and adult incontinence and infant care products.



•

Engineered Products and Services designs, manufactures, distributes and services engineered products, including industrial valves and controls as well as steel tubular goods, and provides environmental and other industrial consulting services.



•

Plastics and Adhesives designs, manufactures and distributes plastic products, adhesives and films.

142

        During 2004, Tyco's Precision Interconnect business was transferred from Healthcare to Electronics. During 2003, the Company finalized its plan to sell the TGN and, as a result, reorganized its reporting structure such that the results of the TGN business held for sale are presented within Corporate and Other. Also, during 2003, the Company changed its internal reporting structure such that the operations of Tyco's plastics and adhesives businesses (previously reported within Healthcare and Specialty Products) now comprise the Plastics and Adhesives reportable segment. The Company has conformed its segment reporting accordingly and has reclassified comparative prior period information to reflect these changes. Additionally, the segment and geographic data has been reclassified to exclude the results of discontinued operations.

        Selected information by business segment is presented in the following tables for the years ended September 30, 2004, 2003 and 2002 ($ in millions).

		2004		2003		2002
Net Revenue:
Fire and Security		$	11,447	$	10,832	$	10,205
Electronics			11,822		10,492		10,592
Healthcare			9,110		8,420		7,764
Engineered Products and Services(1)			6,007		4,498		4,533
Plastics and Adhesives			1,742		1,731		1,722
Corporate and Other(2)			25		14		8
	Net revenue	$	40,153	$	35,987	$	34,824

⁽¹⁾

Includes $739 million in 2004 to reflect sub-contract costs in net revenue and cost of revenue at Infrastructure Services. These adjustments had no impact on operating income (See Note 1).

⁽²⁾

Revenue relates to the TGN business held for sale.

143

TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2004			2003			2002
Operating income (loss):
Fire and Security	$	899		$	342		$	900
Electronics		1,749			1,241			(1,142	)
Healthcare		2,365			2,104			1,833
Engineered Products and Services		620			362			251
Plastics and Adhesives		69			171			196
Corporate and Other(1)		(385	)		(1,161	)		(3,510	)
	$	5,317		$	3,059		$	(1,472	)

⁽¹⁾

Includes operating loss of $73 million, $760 million and $3,090 million in 2004, 2003 and 2002, respectively, related to the TGN business held for sale.

        Revenue by groups of products within Tyco's segments for the years ended September 30, 2004, 2003 and 2002 is as follows ($ in millions):

		2004		2003		2002
Revenue by Groups of Products:
Electronic Security Services		$	6,760	$	6,345	$	5,975
Fire Protection Contracting and Services			4,687		4,487		4,230
	Fire and Security		11,447		10,832		10,205
Electronic Components			9,476		8,244		7,717
Wireless			835		771		812
Electrical Contracting Services			353		370		346
Power Systems			492		568		623
Printed Circuit Group			460		403		416
Submarine Telecommunications			206		136		678
	Electronics		11,822		10,492		10,592
Medical Devices & Supplies			7,124		6,543		6,117
Retail			912		904		763
Pharmaceuticals			1,074		973		884
	Healthcare		9,110		8,420		7,764
Flow Control and Fire Products			3,037		2,717		2,789
Electrical and Metal Products			1,545		1,163		1,258
Infrastructure Services(1)			1,425		618		486
	Engineered Products and Services		6,007		4,498		4,533
Plastics			965		917		871
A&E Products			251		296		322
Adhesives			263		260		271
Ludlow Coated Products			263		258		258
	Plastics and Adhesives		1,742		1,731		1,722
Corporate and Other(2)			25		14		8
	Net revenue	$	40,153	$	35,987	$	34,824

⁽¹⁾

Includes $739 million in 2004 to reflect sub-contract costs in net revenue and cost of revenue at Infrastructure Services. These adjustments had no impact on operating income (See Note 1).

⁽²⁾

Revenue relates to the TGN business held for sale.

144

        Total assets by segment at September 30, 2004, 2003 and 2002 are as follows ($ in millions):

		2004		2003		2002
Total assets:
	Fire and Security	$	18,199	$	18,626	$	19,525
	Electronics		18,536		17,100		17,647
	Healthcare		13,190		13,069		13,173
	Engineered Products and Services		7,124		6,931		6,480
	Plastics and Adhesives		1,543		1,602		1,668
	Corporate and Other(1)		4,460		5,180		6,518
	Assets held for sale		615		489		489
		$	63,667	$	62,997	$	65,500

⁽¹⁾

Includes total assets (excluding cash which is not held for sale) for the TGN business held for sale of $48 million and $642 million at September 30, 2003 and 2002, respectively.

        Depreciation and amortization and capital expenditures, net by segment for the years ended September 30, 2004, 2003 and 2002 are as follows ($ in millions):

		2004		2003		2002
Depreciation and amortization:
	Fire and Security	$	1,132	$	1,199	$	1,044
	Electronics		540		484		520
	Healthcare		327		310		308
	Engineered Products and Services		116		103		122
	Plastics and Adhesives		57		41		38
	Corporate and Other(1)		4		46		41
		$	2,176	$	2,183	$	2,073

⁽¹⁾

Includes depreciation for the TGN business held for sale totaling zero, $37 million and $29 million in 2004, 2003 and 2002, respectively.

		2004			2003		2002
Capital expenditures, net:
	Fire and Security	$	335		$	509	$	819
	Electronics		370			404		457
	Healthcare		239			191		268
	Engineered Products and Services		45			46		80
	Plastics and Adhesives		28			19		30
	Corporate and Other(1)		(2	)		105		1,169
		$	1,015		$	1,274	$	2,823

⁽¹⁾

Includes capital expenditures of zero, $113 million and $1,146 million related to the TGN business held for sale in 2004, 2003 and 2002, respectively.

145

        Net revenue by geographic area for the years ended September 30, 2004, 2003 and 2002 is as follows ($ in millions):

		2004		2003		2002
Net revenue:
United States		$	21,156	$	19,822	$	20,292
Other Americas			2,169		1,844		2,007
Europe			11,018		9,366		8,026
Asia—Pacific			5,810		4,955		4,499
	Net revenue(1)	$	40,153	$	35,987	$	34,824

⁽¹⁾

Revenue from external customers are attributed to individual countries based on the reporting entity that records the transaction.

        Long-lived assets by geographic area at September 30, 2004, 2003 and 2002 are as follows ($ in millions):

	2004		2003		2002
Long-lived assets(1):
United States	$	6,597	$	7,047	$	7,362
Other Americas		652		716		298
Europe		2,312		2,337		1,956
Asia—Pacific		962		897		806
Corporate and Other(2)		303		298		1,041
	$	10,826	$	11,295	$	11,463

⁽¹⁾

Long-lived assets are comprised primarily of property, plant and equipment and exclude goodwill and other intangible assets.

⁽²⁾

Includes long-lived assets for the TGN business held for sale of $24 million, $11 million and $586 million at September 30, 2004, 2003, and 2002, respectively.

24.    Supplementary Income Statement Information

       Selected supplementary income statement information for the years ended September 30, 2004, 2003 and 2002 are as follows ($ in millions):

	2004		2003		2002
Company-sponsored research and development	$	784	$	667	$	633
Advertising	$	237	$	186	$	180

146

25.    Supplementary Balance Sheet Information

       Selected supplementary balance sheet information at September 30, 2004 and 2003 are as follows ($ in millions):

		2004			2003
Purchased materials and manufactured parts		$	1,193		$	1,076
Work in process			973			925
Finished goods			2,199			2,231
	Inventories	$	4,365		$	4,232
Land		$	555		$	553
Buildings			2,807			2,780
Subscriber systems			4,940			4,929
Machinery and equipment			10,032			10,018
Leasehold improvements			365			359
Construction in progress			663			546
Accumulated depreciation			(9,727	)		(9,007	)
	Property, plant and equipment, net	$	9,635		$	10,178
Accrued payroll and payroll related costs		$	997		$	862
Deferred revenue—non-current portion		$	1,101		$	1,192
Income taxes			2,432			2,466
Other			4,005			3,784
	Other liabilities	$	7,538		$	7,442

147

26.    Summarized Quarterly Financial Data (Unaudited)

       Summarized quarterly financial data for the years ended September 30, 2004 and 2003 is as follows ($ in millions, except per share data):

		2004
		1st Qtr.(1)(2)			2nd Qtr.(3)			3rd Qtr.(4)			4th Qtr.(5)
Net revenue		$	9,665		$	9,821		$	10,225		$	10,442
Gross profit			3,448			3,518			3,778			3,758
Income from continuing operations			721			788			925			571
Loss from discontinued operations, net of income taxes			(2	)		(5	)		(2	)		(117	)
Net income			719			783			923			454
Basic earnings per share:
	Income from continuing operations		0.36			0.39			0.46			0.28
	Net income		0.36			0.39			0.46			0.23
Diluted earnings per share:
	Income from continuing operations		0.34			0.37			0.43			0.27
	Net income		0.34			0.37			0.43			0.22

⁽¹⁾

Net revenue excludes $214 million of revenue related to discontinued operations. Income from continuing operations includes net restructuring charges of $5 million, impairment charges of $23 million and a loss of $5 million related to retirement of debt.

⁽²⁾

Effective January 1, 2004, retroactive to October 1, 2003, the Company began reflecting sub-contract costs in net revenue and cost of revenue at Infrastructure Services (a business unit within Engineered Products and Services). These adjustments had no impact on net income (see Note 1).

⁽³⁾

Net revenue excludes $221 million of revenue related to discontinued operations. Income from continuing operations includes losses and impairments on divestitures of $85 million, net restructuring and other charges of $36 million, of which charges of $1 million are included in cost of sales, and charges for the impairment of long-lived assets of $16 million.

⁽⁴⁾

Net revenue excludes $226 million of revenue related to discontinued operations. Income from continuing operations includes net restructuring and other charges of $42 million, of which charges of $2 million are included in cost of sales, charges for the impairment of long-lived assets of $14 million, net gains on divestitures of $3 million and a loss of $38 million related to the retirement of debt.

⁽⁵⁾

Net revenue excludes $228 million of revenue related to discontinued operations. Income from continuing operations includes net restructuring and other charges of $173 million, of which charges of $4 million are included in cost of sales, charges for the impairment of long-lived assets of $46 million, net losses and impairments on divestitures of $34 million and a loss of $241 million related to the retirement of debt.

148

		2003
		1st Qtr.(1)		2nd Qtr.(2)		3rd Qtr.(3)			4th Qtr.(4)
Net revenue		$	8,728	$	8,790	$	9,196		$	9,273
Gross profit			3,166		3,106		3,377			3,158
Income (loss) from continuing operations			559		124		568			(216	)
Income (loss) from discontinued operations, net of income taxes			27		—		(1	)		(6	)
Net income (loss)			586		124		567			(297	)
Basic earnings (loss) per share:
	Income (loss) from continuing operations		0.28		0.06		0.28			(0.11	)
	Net income (loss)		0.29		0.06		0.28			(0.15	)
Diluted earnings (loss) per share:
	Income (loss) from continuing operations		0.28		0.06		0.27			(0.11	)
	Net income (loss)		0.29		0.06		0.27			(0.15	)

⁽¹⁾

Net revenue excludes $199 million of revenue related to discontinued operations. Income from continuing operations includes net restructuring credits of $4 million and a $1 million gain from the retirement of debt.

⁽²⁾

Net revenue excludes $199 million of revenue related to discontinued operations. Income from continuing operations includes charges recorded for changes in estimates of $389 million which arose from the Company's intensified internal audits and detailed controls and operating reviews (see Changes in Estimates Recorded During the Quarter Ended March 31, 2003 below) and a charge for the impairment of intangible assets of $77 million. Also includes a charge of $91 million for a retroactive, incremental premium on prior period directors and officers insurance and a $23 million gain from the retirement of debt.

⁽³⁾

Net revenue excludes $216 of revenue related to discontinued operations. Income from continuing operations includes net restructuring, impairment and other credits of $35 million and other charges of $62 million. In addition, includes a $152 million loss from the retirement of debt and $19 million of interest income.

⁽⁴⁾

Net revenue excludes $200 million of revenue related to discontinued operations. Loss from continuing operations includes net restructuring and other charges of $8 million, charges for the impairment of long-lived assets of $738 million, charges for the impairment of goodwill of $278 million, and other charges totaling $50 million primarily related to uncollectible receivables, the dismantlement of customers' ADT security systems and severance of corporate employees. Loss from continuing operations also includes charges of $12 million for the write-down of investments and a charge of $2 million, which is included in interest expense. Net income also includes a loss of $75 million, net of income taxes, for the cumulative effect of an accounting change.

Changes in Estimates Recorded During the Quarter Ended March 31, 2003—During the quarter ended March 31, 2003, the Company intensified a process whereby internal audits and detailed controls and operating reviews were conducted. As a result of this process, the Company recorded $389 million of pretax charges relating to new information and changes in facts and circumstances occurring during the quarter. The process included assessing the continued recoverability of assets, including accounts receivable, inventory and installed security systems and equity investments, and the estimated costs of settling legal, environmental and insurance obligations. The assessments were based on an analysis of the impact of circumstances that occurred during the quarter and on our assessment of the recoverability of certain assets and costs to settle certain liabilities. The assessments include changes in judgments relative to the adequacy of reserves and contingent liabilities. Concurrent with this review process and resulting assessments by management during the quarter, the Company decided to discontinue existing product lines and terminate an information technology

149

systems implementation project. As a result of these decisions, inventory and other asset balances were written down to their net realizable value.

        The impact of the net charges recorded in the second quarter of and included in the Consolidated Statement of Operations for 2003 is as follows ($ in millions):

Cost of sales		$	(111	)
Selling, general and administrative expense			(243	)
Restructuring and other credits, net			60
Impairment of long-lived assets			(10	)
Operating income			(304	)
Other expense, net			(85	)
	Income from continuing operations before income taxes and minority interest	$	(389	)

        The net charges include $140 million related to asset reserve valuations, $95 million of increased cost estimates for insurance liabilities ($49 million for workers' compensation accruals and $46 million for product and general liability insurance liabilities), $84 million related to an other than temporary decline in the value of investments, $62 million for other accounting estimate changes described below, environmental liabilities of $18 million, legal accruals of $20 million, other various accruals of $15 million, $17 million for account write-offs included primarily in selling, general and administrative expenses, where the Company concluded that the recoverability of various asset balances had become doubtful, and a $10 million write-off of capitalized external costs for a European financial computer system based on the Company's decision in the second quarter to discontinue the new system under development and continue to use the existing system. The above charges are partially offset by credits of $72 million, of which $12 million is included in cost of sales, related to restructuring charge reversals (see Note 2) that arose during the second quarter of 2003.

        The adjustments for asset valuations include a $77 million write-down of inventories, $52 million increase in the allowance for doubtful accounts and $11 million write-off of subscriber systems. The inventory charge of $77 million was primarily due to the finalization of plans regarding the disposition of inventory in connection with curtailed programs and product lines and the Company's decision during the second quarter to exit certain product lines in our fire and security business. The increases in the allowance for doubtful accounts and the write-off of subscriber systems were primarily due to the further deterioration in accounts receivable aging and increased customer cancellations in certain non-strategic European security businesses during the second quarter. The inventory charge and subscriber systems write-offs are included in cost of sales and the allowance for doubtful accounts revision is included in selling, general and administrative expenses.

        The workers' compensation and product and general liability changes in estimate are based on management estimates with the assistance of third-party actuarial valuations of insurance liabilities. The charge is included in selling, general and administrative expenses ($65 million) and cost of product sales ($30 million). These adjustments related to changes in facts and circumstances occurring during the quarter ended March 31, 2003 which necessitated a change in assumptions and estimates. In particular, the Company identified trend data which required the Company to revise its assumptions as a result of an unanticipated increase in the number and changes in the nature of claims incurred and the rate of increase of medical costs, as well as the emergence of previously unanticipated new claims. In addition, the Company experienced an increase in workers' compensation expense, particularly in California, as a result of adverse legal developments toward employers.

150

        The investment write-down, included in other (expense) income, net, primarily consists of a $76 million loss on various equity investments. It became evident in the quarter ended March 31, 2003 that the declines in the fair values of the investments were other than temporary, primarily due to depressed economic conditions. Factors that management considered in making its assessment included investees' inability to raise funds during the quarter, bankruptcy, continued losses by the investees, lack of sufficient future expected cash flows, and lower entity valuations based on recent private financing activity. During the quarter ended March 31, 2003, the Company also recognized other expense of $8 million in connection with a bank guarantee on behalf of an equity investee.

        Other accounting estimates includes a charge to selling, general and administrative expenses of $17 million resulting from the Company's revision in the second quarter of deferred commissions related to long-term contracts, $12 million to write-down company-owned properties based on real estate assessments and purchase offers received in the second quarter for assets held for sale, $12 million of additional severance related to terminated executives, and $21 million of other accounting estimate changes, none of which are individually significant, that were included primarily in selling, general and administrative expenses.

        The increased environmental reserves resulted from the finalization of the Company's plan to remediate one of its manufacturing sites in the second quarter, $20 million to establish a reserve related to the estimated settlement amount for contractual disputes and other legal matters based on our determination that such amounts became both probable and estimable in the second quarter, and $15 million of other miscellaneous increased accrual estimates that are primarily included in selling, general and administrative expenses.

151

TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

27.    Tyco International Group S.A.

        TIGSA, a wholly-owned subsidiary of the Company, has public debt securities outstanding (see Note 15), which are fully and unconditionally guaranteed by Tyco. The following tables present condensed consolidating financial information for Tyco, TIGSA and all other subsidiaries. Condensed financial information for Tyco and TIGSA on a stand-alone basis are presented using the equity method of accounting for subsidiaries in which they own or control twenty percent or more of the voting shares.

CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended September 30, 2004
($ in millions)

		Tyco International Ltd.			Tyco International Group S.A.			Other Subsidiaries			Consolidating Adjustments			Total
Net revenue		$	—		$	—		$	40,153		$	—		$	40,153
Cost of product sales			—			—			20,934			—			20,934
Cost of services			—			—			4,717			—			4,717
Selling, general and administrative expenses			90			3			8,628						8,721
Restructuring and other charges, net			—			—			249			—			249
Impairment of long-lived assets			—			—			99			—			99
Losses and impairments on divestitures, net			—			—			116			—			116
	Operating (loss) income		(90	)		(3	)		5,410			—			5,317
Interest income			—			28			63			—			91
Interest expense			(5	)		(819	)		(139	)		—			(963	)
Other expense, net			—			(246	)		(40	)		—			(286	)
Equity in net income of subsidiaries			4,220			2,379			—			(6,599	)		—
Intercompany interest and fees			(1,245	)		1,040			205			—			—
	Income from continuing operations before income taxes and minority interest		2,880			2,379			5,499			(6,599	)		4,159
Income taxes			(1	)		—			(1,139	)		—			(1,140	)
Minority interest			—			—			(14	)		—			(14	)
	Income from continuing operations		2,879			2,379			4,346			(6,599	)		3,005
Loss from discontinued operations, net of income taxes			—			—			(3	)		—			(3	)
Loss on sale of discontinued operations, net of income taxes			—			—			(123	)		—			(123	)
	Net income	$	2,879		$	2,379		$	4,220		$	(6,599	)	$	2,879

152

CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended September 30, 2003
($ in millions)

		Tyco International Ltd.			Tyco International Group S.A.			Other Subsidiaries			Consolidating Adjustments			Total
Net revenue		$	—		$	—		$	35,987		$	—		$	35,987
Cost of product sales			—			—			19,212			—			19,212
Cost of services			—			—			3,968			—			3,968
Selling, general and administrative expenses			54			3			8,662			—			8,719
Restructuring and other credits, net			—			—			(74	)		—			(74	)
Impairment of long-lived assets			—			—			825			—			825
Goodwill impairment			—			—			278			—			278
	Operating (loss) income		(54	)		(3	)		3,116			—			3,059
Interest income			2			34			71			—			107
Interest expense			(43	)		(996	)		(109	)		—			(1,148	)
Other income (expense), net			23			(159	)		(87	)		—			(223	)
Equity in net income of subsidiaries			1,770			579			—			(2,349	)		—
Intercompany interest and fees			(718	)		954			(236	)		—			—
	Income from continuing operations before income taxes and minority interest		980			409			2,755			(2,349	)		1,795
Income taxes			—			—			(757	)		—			(757	)
Minority interest			—			—			(3	)		—			(3	)
	Income from continuing operations		980			409			1,995			(2,349	)		1,035
Income from discontinued operations, net of income taxes			—			—			20			—			20
	Income before cumulative effect of accounting change		980			409			2,015			(2,349	)		1,055
Cumulative effect of accounting change, net of income taxes			—			—			(75	)		—			(75	)
	Net income	$	980		$	409		$	1,940		$	(2,349	)	$	980

153

CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended September 30, 2002
($ in millions)

		Tyco International Ltd.			Tyco International Group S.A.			Other Subsidiaries			Consolidating Adjustments		Total
Net revenue		$	—		$	—		$	34,824		$	—	$	34,824
Cost of product sales			—			—			19,008			—		19,008
Cost of services			—			—			3,384			—		3,384
Selling, general and administrative expenses			27			—			8,084			—		8,111
Restructuring and other charges, net			1			—			1,120			—		1,121
Impairment of long-lived assets			—			—			3,310			—		3,310
Goodwill impairment			—			—			1,344			—		1,344
Write-off of purchased in-process research and development			—			—			18			—		18
	Operating loss		(28	)		—			(1,444	)		—		(1,472	)
Interest income			—			38			79			—		117
Interest expense			(117	)		(932	)		(27	)		—		(1,076	)
Other income (expense), net			2			33			(252	)		—		(217	)
Equity in net (loss) income of subsidiaries			(8,516	)		2,003			—			6,513		—
Intercompany interest and fees			(521	)		861			(340	)		—		—
	(Loss) income from continuing operations before income taxes and minority interest		(9,180	)		2,003			(1,984	)		6,513		(2,648	)
Income taxes			—			—			(202	)		—		(202	)
Minority interest			—			—			(1	)		—		(1	)
	(Loss) income from continuing operations		(9,180	)		2,003			(2,187	)		6,513		(2,851	)
Loss from discontinued operations, net of income taxes			—			—			(6,270	)		—		(6,270	)
Loss on sale of discontinued operations, net of income taxes			—			—			(59	)		—		(59	)
	Net (loss) income	$	(9,180	)	$	2,003		$	(8,516	)	$	6,513	$	(9,180	)

154

TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING BALANCE SHEET
September 30, 2004
($ in millions)

			Tyco International Ltd.		Tyco International Group S.A.		Other Subsidiaries			Consolidating Adjustments			Total
Assets
Current Assets:
	Cash and cash equivalents		$	1	$	2,452	$	2,014		$	—		$	4,467
	Accounts receivable, net			1		—		6,462			—			6,463
	Inventories			—		—		4,365			—			4,365
	Intercompany receivables			203		591		10,507			(11,301	)		—
	Prepaid expenses and other current assets			7		11		1,576			—			1,594
	Deferred income taxes			—		—		1,041			—			1,041
	Assets held for sale			—		—		615			—			615
		Total current assets		212		3,054		26,580			(11,301	)		18,545
	Property, plant and equipment, net			—		—		9,635			—			9,635
	Goodwill			—		—		25,510			—			25,510
	Intangible assets, net			—		—		5,335			—			5,335
	Investment in subsidiaries			57,519		45,816		—			(103,335	)		—
	Intercompany loans receivable			—		20,223		24,697			(44,920	)		—
	Other assets			24		254		4,364			—			4,642
		Total Assets	$	57,755	$	69,347	$	96,121		$	(159,556	)	$	63,667
Liabilities and Shareholder's Equity
Current Liabilities:
	Loans payable and current maturities of long-term debt		$	—	$	1,766	$	350		$	—		$	2,116
	Accounts payable			1		—		2,697			—			2,698
	Accrued and other current liabilities			39		270		4,777			—			5,086
	Deferred revenue			—		—		729			—			729
	Intercompany payables			8,748		1,759		794			(11,301	)		—
	Liabilities held for sale			—		—		523			—			523
		Total current liabilities		8,788		3,795		9,870			(11,301	)		11,152
	Long-term debt			2		13,796		819			—			14,617
	Intercompany loans payable			18,615		6,082		20,223			(44,920	)		—
	Other liabilities			58		1		7,479			—			7,538
		Total Liabilities		27,463		23,674		38,391			(56,221	)		33,307
Minority interest				—		—		68			—			68
Shareholders' Equity:
	Preference shares			—		—		4,680			(4,680	)		—
	Common shares			405		—		(3	)		—			402
	Other shareholders' equity			29,887		45,673		52,985			(98,655	)		29,890
		Total Shareholders' Equity		30,292		45,673		57,662			(103,335	)		30,292
		Total Liabilities and Shareholders' Equity	$	57,755	$	69,347	$	96,121		$	(159,556	)	$	63,667

155

CONSOLIDATING BALANCE SHEET
September 30, 2003
($ in millions)

			Tyco International Ltd.		Tyco International Group S.A.		Other Subsidiaries			Consolidating Adjustments			Total
Assets
Current Assets:
	Cash and cash equivalents		$	47	$	2,282	$	1,857		$	—		$	4,186
	Accounts receivable, net			—		—		5,555			—			5,555
	Inventories			—		—		4,232			—			4,232
	Intercompany receivables			111		443		6,092			(6,646	)		—
	Prepaid expenses and other current assets			—		496		1,635			—			2,131
	Deferred income taxes			—		—		795			—			795
	Assets held for sale			—		—		489			—			489
		Total current assets		158		3,221		20,655			(6,646	)		17,388
	Property, plant and equipment, net			1		—		10,177			—			10,178
	Goodwill			—		1		25,527			—			25,528
	Intangible assets, net			—		—		5,779			—			5,779
	Investment in subsidiaries			52,328		42,727		—			(95,055	)		—
	Intercompany loans receivable			218		19,705		24,168			(44,091	)		—
	Other assets			23		502		3,599			—			4,124
		Total Assets	$	52,728	$	66,156	$	89,905		$	(145,792	)	$	62,997
Liabilities and Shareholder's Equity
Current Liabilities:
	Loans payable and current maturities of long-term debt		$	2,476	$	—	$	238		$	—		$	2,714
	Accounts payable			1		1		2,596			—			2,598
	Accrued and other current liabilities			51		271		4,187			—			4,509
	Deferred revenues							809						809
	Intercompany payables			5,163		929		554			(6,646	)		—
	Liabilities held for sale			—		—		192			—			192
		Total current liabilities		7,691		1,201		8,576			(6,646	)		10,822
Long-term debt				—		16,817		1,434			—			18,251
Intercompany loans payable				18,615		5,553		19,923			(44,091	)		—
Other liabilities				53		—		7,389			—			7,442
		Total Liabilities		26,359		23,571		37,322			(50,737	)		36,515
Minority interest				—		—		113			—			113
Shareholders' Equity:
	Preference shares			—		—		4,680			(4,680	)		—
	Common shares			404		—		(4	)		—			400
	Other shareholders' equity			25,965		42,585		47,794			(90,375	)		25,969
		Total Shareholders' Equity		26,369		42,585		52,470			(95,055	)		26,369
		Total Liabilities and Shareholders' Equity	$	52,728	$	66,156	$	89,905		$	(145,792	)	$	62,997

156

TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended September 30, 2004
($ in millions)

		Tyco International Ltd.			Tyco International Group S.A.			Other Subsidiaries			Consolidating Adjustments			Total
Cash Flows From Operating Activities:
	Net cash provided by operating activities	$	2,311		$	1,109		$	1,964		$	—		$	5,384
Cash Flows From Investing Activities:
Capital expenditures, net			—			—			(1,015	)		—			(1,015	)
Acquisition of customer accounts (ADT dealer program)			—			—			(254	)		—			(254	)
Acquisition of businesses, net of cash acquired			—			—			(15	)		—			(15	)
Cash paid for purchase accounting and holdback/earn-out liabilities			—			—			(107	)		—			(107	)
Divestiture of businesses, net of cash retained by businesses sold			—			—			236			—			236
Decrease (increase) in investments			—			470			(47	)		—			423
Decrease in intercompany loans			218			51			—			(269	)		—
Decrease in restricted cash			—			315			27			—			342
Other			—			—			(25	)		—			(25	)
	Net cash provided by (used in) investing activities		218			836			(1,200	)		(269	)		(415	)
Cash Flows From Financing Activities:
Net repayments of debt			(2,480	)		(1,775	)		(517	)		—			(4,772	)
Proceeds from exercise of share options			—			—			155			—			155
Dividends paid			(100	)		—			—			—			(100	)
Repurchase of common shares			—			—			(1	)		—			(1	)
Loan repayments to parent			—			—			(269	)		269			—
Other			5						(29	)		—			(24	)
	Net cash used in financing activities		(2,575	)		(1,775	)		(661	)		269			(4,742	)
Effect of currency translation on cash			—			—			45			—			45
Effect of discontinued operations on cash			—			—			9			—			9
Net (decrease) increase in cash and cash equivalents			(46	)		170			157			—			281
Cash and cash equivalents at beginning of year			47			2,282			1,857			—			4,186
Cash and cash equivalents at end of year		$	1		$	2,452		$	2,014		$	—		$	4,467

157

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended September 30, 2003
($ in millions)

		Tyco International Ltd.			Tyco International Group S.A.			Other Subsidiaries			Consolidating Adjustments			Total
Cash Flows From Operating Activities:
	Net cash provided by operating activities	$	1,171		$	624		$	3,514		$	—		$	5,309
Cash Flows From Investing Activities:
Capital expenditures, net			4			—			(1,278	)		—			(1,274	)
Acquisition of customer accounts (ADT dealer program)			—			—			(597	)		—			(597	)
Acquisition of businesses, net of cash acquired			—			—			(44	)		—			(44	)
Cash paid for purchase accounting and holdback/earn-out liabilities			—			—			(272	)		—			(272	)
Divestiture of businesses, net of cash retained by businesses sold			—			—			9			—			9
Increase in investments			—			(377	)		(6	)		—			(383	)
Decrease in intercompany loans			—			2,658			—			(2,658	)		—
Increase in investment in subsidiaries			(2	)		(1	)		—			3			—
Increase in restricted cash			—			(134	)		(94	)		—			(228	)
Other			—			(9	)		67			—			58
	Net cash provided by (used in) investing activities		2			2,137			(2,215	)		(2,655	)		(2,731	)
Cash Flows From Financing Activities:
Net repayments of debt			(1,063	)		(3,450	)		(104	)		—			(4,617	)
Proceeds from exercise of share options			—			—			15			—			15
Dividends paid			(101	)		—			—			—			(101	)
Repurchase of common shares			—			—			(1	)		—			(1	)
Loan repayments to parent			—			—			(2,658	)		2,658			—
Capital contributions from parent									3			(3	)		—
Other			—			—			(8	)		—			(8	)
	Net cash used in financing activities		(1,164	)		(3,450	)		(2,753	)		2,655			(4,712	)
Effect of currency translation on cash			—			—			89			—			89
Effect of discontinued operations on cash			—			—			53			—			53
Net increase (decrease) in cash and cash equivalents			9			(689	)		(1,312	)		—			(1,992	)
Cash and cash equivalents at beginning of year			38			2,971			3,169			—			6,178
Cash and cash equivalents at end of year		$	47		$	2,282		$	1,857		$	—		$	4,186

158

TYCO INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended September 30, 2002
($ in millions)

		Tyco International Ltd.			Tyco International Group S.A.			Other Subsidiaries			Consolidating Adjustments			Total
Cash Flows From Operating Activities:
	Net cash (used in) provided by operating activities	$	(1,128	)	$	(91	)	$	6,642			—		$	5,423
Cash Flows From Investing Activities:
Capital expenditures, net			—			—			(2,823	)		—			(2,823	)
Acquisition of customer accounts (ADT dealer program)			—			—			(1,138	)		—			(1,138	)
Acquisition of businesses, net of cash acquired			—			—			(1,684	)		—			(1,684	)
Cash paid for purchase accounting and holdback/earn-out liabilities			—			—			(625	)		—			(625	)
Net proceeds from the sale of CIT			—			—			4,395			—			4,395
Divestiture of businesses, net of cash retained by businesses sold			—			—			139			—			139
Decrease (increase) in investments			6			(94	)		71			—			(17	)
Increase in intercompany loans			—			(258	)		—			258			—
Decrease (increase) in investment in subsidiaries			1,022			—			(72	)		(950	)		—
Increase in restricted cash			—			(181	)		(15	)		—			(196	)
Other			—			—			(95	)		—			(95	)
	Net cash provided by (used in) investing activities		1,028			(533	)		(1,847	)		(692	)		(2,044	)
Cash Flows From Financing Activities:
Net (repayments of) proceeds from debt			(29	)		3,558			(1,578	)		—			1,951
Proceeds from sale of common shares for acquisitions			502			—			(502	)		—			—
Proceeds from exercise of share options			58			—			128			—			186
Dividends paid			(100	)		—			—			—			(100	)
Repurchase of common shares			—			—			(789	)		—			(789	)
Loan proceeds from parent			—			—			258			(258	)		—
Repayment of intercompany note payable			(295	)		—			295			—			—
Net capital distributions to parent			—			—			(950	)		950			—
Capital contributions to Tyco Capital			—			—			(200	)		—			(200	)
Other			—			—			(10	)		—			(10	)
	Net cash provided by (used in) financing activities		136			3,558			(3,348	)		692			1,038
Effect of currency translation on cash			—			—			2			—			2
Effect of discontinued operations on cash			—			—			(21	)		—			(21	)
Net increase in cash and cash equivalents			36			2,934			1,428			—			4,398
Cash and cash equivalents at beginning of year			2			37			1,741			—			1,780
Cash and cash equivalents at end of year		$	38		$	2,971		$	3,169		$	—		$	6,178

28.   Subsequent Event

        In November 2004, Tyco agreed to sell the TGN to one of India's telephone and internet service providers for $130 million. If the sale is consummated, the Company would expect to record a gain. The sale is subject to governmental approval in the United States, India and other countries. The Company has presented the operations of the TGN in continuing operations as the criteria for discontinued operations have not been met at September 30, 2004. As the finalization of the proposed transaction progresses, the Company will continue to assess the criteria for discontinued operations treatment.

        On December 9, 2004, the Board of Directors approved an increase in the quarterly dividend on the Company's common shares from $0.0125 to $0.10 per share. The dividend is payable on February 1, 2005 to shareholders of record as of January 3, 2005.

159

TYCO INTERNATIONAL LTD.
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(in millions)

Description		Balance at Beginning of Year		Additions Charged to Income		Acquisitions, Divestitures and Other		Deductions			Balance at End of Year
Accounts Receivable:
	Year Ended September 30, 2002	$	550	$	331	$	100	$	(349	)	$	632
	Year Ended September 30, 2003		632		379		27		(319	)		719
	Year Ended September 30, 2004		719		158		19		(372	)		524

160

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TABLE OF CONTENTS
PART I

Item 1. Business

PART II
Critical Accounting Policies
Liquidity and Capital Resources
Commitments and Contingencies
Off-Balance Sheet Arrangements
Accounting Pronouncements
Risk Factors
Forward-Looking Information

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information

PART III

Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accountant Fees and Services

PART IV
SIGNATURES
TYCO INTERNATIONAL LTD. Index to Consolidated Financial Information
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TYCO INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF OPERATIONS Years ended September 30, 2004, 2003 and 2002 (in millions, except per share data)
TYCO INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS As of September 30, 2004 and 2003 (in millions, except share data)
TYCO INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years Ended September 30, 2004, 2003 and 2002 (in millions)
TYCO INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended September 30, 2004, 2003 and 2002 (in millions)
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATING STATEMENT OF OPERATIONS For the Year Ended September 30, 2004 ($ in millions)
CONSOLIDATING STATEMENT OF OPERATIONS For the Year Ended September 30, 2003 ($ in millions)
CONSOLIDATING STATEMENT OF OPERATIONS For the Year Ended September 30, 2002 ($ in millions)
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATING BALANCE SHEET September 30, 2004 ($ in millions)
CONSOLIDATING BALANCE SHEET September 30, 2003 ($ in millions)
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended September 30, 2004 ($ in millions)
CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended September 30, 2003 ($ in millions)
TYCO INTERNATIONAL LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended September 30, 2002 ($ in millions)
TYCO INTERNATIONAL LTD. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in millions)

EX-10.3

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Exhibit 10.3

TYCO INTERNATIONAL (US) INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

PLAN DOCUMENT

Amended and Restated as of October 1, 2000

        1.    Introduction.

        (a)   The name of this plan is the Tyco International (US) Inc. Supplemental Executive Retirement Plan. The Plan is intended to make up for contributions that cannot be made on behalf of certain key employees under the Savings Plan by reason of the Limitations. The Plan shall be construed consistent with the purposes described herein, including without limitation, the anti-conditioning rules of Section 401(k)(4) of the Code.

        (b)   The Plan is intended to be "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

        2.    Definitions.    Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context. Any capitalized term not defined herein shall have the meaning given to it in the relevant Savings Plan.

        (a)   "Account" means the bookkeeping account maintained for each Participant to which amounts credited on behalf of the Participant under Section 3 shall be recorded. Effective as of October 1, 2000, the Account balances of a Participant who is employed by TyCom Ltd., and who is not a TyCom Shared Services Employee shall automatically be credited to his accounts under the TyCom Ltd. Supplemental Executive Retirement Plan.

        (b)   "ADT Plans" means the ADT Inc. Executive Supplemental Pension and Executive Retirement Income Plans.

        (c)   "Affiliated Entity" means any entity considered to be in the same controlled group (within the meaning of Section 302(d)(8)(C) of ERISA) as Tyco International (US) Inc. Effective as of October 1, 2000, TyCom Ltd. shall not be considered an Affiliated Entity.

        (d)   "Beneficiary" means the individual(s) designated by the Participant to receive any benefits due upon or after his or her death pursuant to Section 8. In the absence of an effective Beneficiary designation at the time of the Participant's death, the Participant's Beneficiary shall be his or her spouse, or if the Participant does not have a spouse at the date of his or her death, then to the Participant's executors or administrators.

        (e)   "Board of Directors" means the Board of Directors of Tyco International (US) Inc.

        (f)    "Change in Control" means the first to occur of any of the following events:

          (i)  Any "person" (as that term is used in Sections 13 and 14(d)(2) of the Securities Exchange Act of 1934 ("Exchange Act")) becomes the beneficial owner (as that term is used in Section 13(d) of the Exchange Act), directly or indirectly, of 30% or more of TIL's capital stock entitled to vote in the election of directors;

         (ii)  During any period of two consecutive years, individuals who at the beginning of such period constitute the board of directors of TIL cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by TIL's shareholders of each new director was approved by a vote of at least three-quarters of the directors still in office who were directors at the beginning of the period;

        (iii)  The shareholders of TIL approve any consolidation or merger of TIL, other than a merger of TIL in which the holders of the common stock of TIL immediately prior to the merger hold more than 50% of the common stock of the surviving corporation immediately after the merger;

        (iv)  The shareholders of TIL approve any plan or proposal for the liquidation or dissolution of the TIL; or

         (v)  Substantially all of the assets of TIL are sold or otherwise transferred to parties that are not within a "controlled group of corporations" (as defined in Section 1563 of the Code) in which TIL is a member.

        (g)   "Code" means the Internal Revenue Code of 1986, as amended, and any successor code, and related rules, regulations and interpretations.

        (h)   "Committee" means the Company's Retirement Committee.

        (i)    "Company" means Tyco International (US) Inc. and any successor to all or a major portion of its assets or business which assumes the obligations of Tyco International (US) Inc.

        (j)    "Compensation" means, with respect to any Participant, direct cash compensation paid during the calendar year to that Participant by the Company or an Affiliated Entity for services rendered, including salaries, commissions and bonuses, in each case as determined by the Committee, and including any amount which would have been paid to the Participant but for an election under the Savings Plan or the Company's Deferred Compensation Plan, or a cafeteria plan under Section 125 of the Code, but excludes any amounts paid from this Plan or the Company's Deferred Compensation Plan, income from the exercise of non-qualified stock options or from the disqualifying disposition of incentive stock options, income realized when restricted stock becomes fully transferable or is no longer subject to a substantial risk of forfeiture, reimbursement for moving expenses and other relocation expenses, mortgage interest differentials, payment for reimbursement for taxes, international assignment premiums, allowances and any other reimbursements. For the Plan Year ended December 31, 1996, with respect to each Participant who is a Kendall employee, the term "Compensation" as used in this Plan shall exclude bonuses payable pursuant to Kendall's long term incentive plan. With respect to each Participant who is a TyCom Shared Services Employee, the term "Compensation" as used in this Plan shall include payments from TyCom Ltd.

Effective January 1, 1998, "Compensation" shall include Compensation from sources within the United States as described in Section 861 of the Code, and Compensation from sources without the United States as described in Section 862 of the Code.

        (k)   "Determination Date" means the last day of each Quarter and such other dates selected by the Committee from time to time.

        (l)    "Disability" means a Participant's permanent and total incapacity of engaging in any employment for the Company or any Affiliated Entity for physical or mental reasons. Disability shall be deemed to exist only when such Participant meets either the requirements for disability benefits under the Social Security law then in effect, or the requirements for disability benefits under a long-term disability plan maintained by the Company or an Affiliated Entity.

        (m)  "Eligible Employee" means each employee of the Company or an Affiliated Entity with Compensation equal to the limit imposed by Section 401(a)(17) of the Code ($160,000 for 1997) or greater. With regard to the credit provided by Section 3(c), the term "Eligible Employee" also means each Kendall employee who is precluded from receiving the supplemental employer matching contributions under the terms of the Savings Plan. With regard to the credit provided by Section 3(d), the term "Eligible Employee" also means an employee who has incurred a Disability

2

and who is precluded from receiving contributions to the Savings Plan on account of his or her Disability as a result of his or her status as a "highly compensated employee" within the meaning of Section 414(q) of the Code. Notwithstanding the foregoing, the term "Eligible Employee" does not include an employee who is receiving severance pay from the Company or an Affiliated Entity, or an employee who is a participant in the TyCom Ltd. Supplemental Executive Retirement Plan or another supplemental executive retirement plan maintained by an Affiliated Entity.

        (n)   "ERISA" means the Employee Retirement Income Security Act of 1974, as amended and any successor statute, and related rules, regulations and interpretations.

        (o)   "Kendall" means The Kendall Company.

        (p)   "Kendall Plan" means The Kendall Employees' Savings and Investment Plan.

        (q)   "Keystone Plan" means the Keystone International, Inc. Supplemental Profit-Sharing Plan.

        (r)   "Limitations" means the limitations imposed under Sections 401(a)(17) and 415 of the Code.

        (s)   "Participant" means any Eligible Employee designated by the Committee to participate in the Plan. Notwithstanding the foregoing, any individual who was a Participant in a prior Plan Year but who ceases to be an Eligible Employee shall continue to be a Participant so long as amounts remain credited to his or her Account, but he or she shall cease to be a Participant for purposes of receiving Participant Credits under Section 3.

        (t)    "Plan" means the Tyco International (US) Inc. Supplemental Executive Retirement Plan.

        (u)   "Plan Year" means the twelve-month period ending on each December 31st.

        (v)   "Quarter" means each of the three-month periods ending on March, June, September and December in each Plan Year.

        (w)  "Savings Plan" means any one of the Tyco International (US) Inc. Retirement Savings and Investment Plan, including prior to January 1, 1997, the Kendall Plan.

        (x)   "TIL" means Tyco International Ltd., a Bermuda corporation.

        (y)   "TSSL Special Pension Supplement" means the Special Pension Supplement for Former AT&T Employees as set forth in Supplement M to the Tyco International (US) Inc. Retirement Savings and Investment Plan I.

        (z)   "TyCom Shared Services Employee" means an employee of the Company or an Affiliated Entity who is on a split payroll with TyCom Ltd.

        (aa) "Year of Service" means each "Year of Vesting Service" credited to the Participant under the Savings Plan.

        3.    Participant Credits.

        (a)   Within 60 days following the Determination Date, the Company shall credit to the Account of each Participant whose Compensation has exceeded the limit imposed by Section 401(a)(17) of the Code, an amount equal to the maximum employer matching contributions which would have been credited to the account of the Participant under the Tyco International (US) Inc. Retirement Savings and Investment Plan I ("RSIP I") pursuant to the plan formula contained therein, but utilizing the definition of "Compensation" used in this Plan and disregarding the Limitations, regardless of the Participant's actual level of participation in the Savings Plan and regardless of whether the Participant is eligible to participate in RSIP I, less the maximum employer matching contributions in accordance with the plan formula under RSIP I as

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permitted by the Limitations. Notwithstanding the foregoing, with respect to a Participant who is employed by ADT or an ADT business unit, the credits shall be calculated in accordance with the preceding sentence, but using the plan formula of the Savings Plan in which the Participant is eligible to participate.

        (b)   With respect to each Participant who is a Kendall employee, effective as of July 1, 1995, the Company shall credit to such Participant's Account an amount equal to the maximum employer matching contributions which would have been credited to the account of the Participant under the Kendall Plan for the period July 1, 1995 through December 31, 1995 pursuant to the plan formula contained therein (but without regard to the plan provision precluding certain employees from receiving the supplemental match) and utilizing the definition of "Compensation" used in the Kendall Plan and disregarding the Limitations, regardless of the Participant's actual level of participation in the Kendall Plan, less the sum of the maximum employer matching contributions permitted by the Limitations for the same period and the amount credited to the Participant's cash balance account in The Kendall Company and Subsidiaries Pension Plan for the period January 1, 1995 through June 30, 1995. Such credit shall be made as of the last day of each Quarter beginning July 1, 1995 and October 1, 1995.

        (c)   With respect to each Participant who is a Kendall employee and who is precluded by the terms of the Savings Plan from receiving a supplemental employer matching contribution, the Company shall credit to such Participant's Account an amount equal to the maximum supplemental employer matching contributions (i.e., the additional employer matching contributions for participants with ten or more Years of Service) which would have been credited to the account of such Participant under the Savings Plan but for such preclusion. Such credit shall be made as of the last day of each Quarter beginning July 1, 1995. This provision shall cease to apply on and after January 1, 1999.

        (d)   With respect to each Participant who has incurred a Disability, the Company shall credit to such Participant's Account an amount equal to the amount that would have been credited to such Participant's account under the Savings Plan on account of his or her Disability but for his or her status as a "highly compensated employee" within the meaning of Section 414(q) of the Code. Such credit shall be made as of the Determination Date beginning July 1, 1995. With respect to each such Participant whose Disability began before July 1, 1995, the initial credit shall also include amounts that would have been credited to such Participant's account under the Savings Plan from the date of his or her Disability through June 30, 1995.

        (e)   Notwithstanding the foregoing, the Company reserves the right to adjust the credits to any Participant's Account if the Participant's Compensation for the Plan Year is less than the limit imposed by Section 401(a)(17) of the Code.

        (f)    Effective as of the last day of each Plan Year commencing with the Plan Year beginning January 1, 1998, the Company shall credit to each eligible Participant's Account an amount equal to the TSSL Special Pension Supplement which would be credited to the account of the Participant under Supplement M to the Tyco International (US) Inc. Retirement Savings and Investment Plan I, but disregarding the Limitations, less the TSSL Special Pension Supplement actually credited to the Participant's Account under such Supplement M to the Tyco International (US) Inc. Retirement Savings and Investment Plan I. A separate bookkeeping account shall be maintained for amounts credited to a Participant's Account, and the credited earnings and losses thereon, until such time as the Participant is fully vested in the total of all his or her Accounts pursuant to Section 5. This provision shall cease to apply on and after September 30, 2000.

        (g)   With respect to each Participant who was a participant in the Keystone Plan, effective as of April 1, 2000, the Company shall transfer from the Keystone Plan to such Participant's Account under the Plan an amount equal to the amount credited to the Participant's 'Supplemental Plan

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Account' in the Keystone Plan. The transfer of such amount to a Participant's Account pursuant to this paragraph (g) shall be in lieu of maintaining such credits under the Keystone Plan.

        (h)   With respect to each Participant who was a participant in the ADT Plans, effective as of September 30, 1999, the Company shall transfer from the ADT Plans to such Participant's Account under the Plan an amount equal to the amount credited to the Participant's accounts in the ADT Plans. The transfer of such amount to a Participant's Account pursuant to this paragraph (h) shall be in lieu of maintaining such credits under the ADT Plans.

        4.    Crediting Earnings and Losses.    In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, amounts shall be credited or debited to a Participant's Account in accordance with the following rules:

        (a)   Election of Measurement Funds.    Each Participant, including former Participants with Accounts, shall elect the manner of deemed investment of all amounts credited to his or her Account among the Measurement Funds (as described in Section 4(c) below). By such election, the Participant may (but is not required to) add or delete one or more Measurement Funds to be used to determine the additional amounts to be credited to his or her Account balance, or to change the portion of his or her Account allocated to each previously or newly elected Measurement Fund. Such an election under this Section 4 may be made on a daily basis through the voice response system provided by the Committee's administrative delegate (or through such other system designated by the Committee) and shall be effective as soon as reasonably possible thereafter. Such an election must be in accordance with any and all rules and regulations established by the Committee for this purpose. Any election made hereunder shall continue to be effective until properly revoked by the Participant.

        (b)   Proportionate Allocation.    In making any election described in Section 4(a) above, the Participant shall specify, in increments of 1%, the percentage of his or her Account to be allocated to a Measurement Fund (as if the Participant were making an investment in that Measurement Fund with that portion of his or her Account).

        (c)   Measurement Funds.    The Participant may elect one or more of the Measurement Funds (the "Measurement Funds") identified in Appendix A, attached hereto and made a part hereof, for the purpose of crediting additional amounts to his or her Account. As necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund.

        (d)   Crediting or Debiting Method.    The performance of each elected Measurement Fund (either positive or negative) will be determined by the Committee, in its sole discretion, based on the performance of the Measurement Funds themselves. A Participant's Account shall be credited or debited as of the end of each business day based on the performance of each Measurement Fund elected by the Participant, as determined by the Committee in its sole discretion.

        (e)   No Actual Investment.    Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation to his or her Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account shall not be considered or construed in any manner as an actual investment of his or her Account in any such Measurement Fund.

        (f)    Responsibility for Elections.    Neither the Company nor the Committee shall have any liability as a result of, or be in any manner responsible for, a Participant's individual deemed investment election or a Participant's failure to make a deemed investment election, the Committee's only duty being to credit the Participants' Accounts in accordance with the Participants' deemed investment elections. To the extent that no deemed investment election is in effect, the Committee shall credit such Participant's Account as if such Participant's deemed

5

investment election were a money market mutual fund or other similar short-term fixed-income fund selected by the Committee. The Committee may impose blackout periods from time to time to facilitate introduction of new Measurement Funds or to change the administrative delegate.

        (g)   Change in Method.    Notwithstanding the foregoing, the Committee may change the method of crediting earnings or losses to Accounts under the Plan, by written notice to each Participant, which notice shall specify the new method for crediting earnings or losses to be used and the effective date for such change.

        5.    Vesting.

        (a)   A Participant shall become fully vested in the full value of the amount credited to his or her Account upon attainment of age 55, death, Disability, completion of at least five Years of Service or a Change in Control.

        (b)   A Participant whose employment with the Company or any Affiliated Entity terminates prior to attainment of age 55 (for any reason other than death or Disability) with fewer than five Years of Service will forfeit all amounts in his or her Account upon his or her termination of employment.

        (c)   Notwithstanding anything in this Section 5 to the contrary, a Participant shall always be fully vested in and have a nonforfeitable right in the full value of the amount credited to his or her Account under Section 3(f) relating to the TSSL Special Pension Supplement, under Section 3(g) relating to the balances transferred from the Keystone Plan and under Section 3(h) relating to the balances transferred from the ADT Plans.

        6.    Timing of Distribution.    Upon initial enrollment in the Plan, a Participant shall irrevocably elect on a form prescribed by the Company to commence distribution of his or her vested Account balance either (a) upon his or her termination of employment, or (b) in any calendar year that is at least five years from initial participation in the Plan as may be selected by the Participant, but not later than the year in which the Participant attains age 70 (the "Distribution Year"). If no election is made, the distribution will commence upon the Participant's termination of employment.

        7.    Method of Distribution.

        (a)   Upon initial enrollment in the Plan, a Participant shall irrevocably elect on a form prescribed by the Company to receive his or her vested Account balance pursuant to one of the following payment options:

          (i)  A single lump sum to be paid as soon as practicable following the quarter in which the Participant terminates his or her employment with the Company or an Affiliated Entity or as soon as practicable in the beginning of the Distribution Year.

         (ii)  Annual installments, in an amount determined in accordance with Section 7(c), over a period not to exceed 15 years, beginning as soon as practicable in the beginning of the calendar year next following the year in which the Participant terminates his or her employment with the Company or an Affiliated Entity or as soon as practicable in the beginning of the Distribution Year.

If no election is made, the distribution will be made in a lump sum pursuant to (i) above.

        (b)   All amounts credited to each Participant's Account which become payable hereunder shall be paid by the Company or an Affiliated Entity in cash. Each such Account shall be charged with the amount distributed with respect thereto as of the date of payment.

        (c)   In the event a benefit is paid in a single lump sum, the value of a Participant's Account shall be determined as of the end of the Quarter following the Participant's termination of

6

employment, or the end of the last Quarter immediately preceding the Distribution Year, as the case may be.

        (d)   In the event a benefit is paid in installments, each annual installment payment amount shall be determined in the following manner:

          (i)  the value of the Participant's Account balance as of the end of the Quarter preceding the payment, divided by

         (ii)  the total number of installment payments not yet made.

        8.    Payments Upon Death.

        (a)   In the event of a Participant's death prior to his or her termination of employment with the Company or an Affiliated Entity, the value of the amount credited to the Participant's Account as determined under Section 7 shall be paid to the Participant's Beneficiary in a single lump sum as soon as practicable after such Participant's death.

        (b)   In the event of a Participant's death after his or her termination of employment but before full distribution of the amounts to be paid to him or her pursuant to Section 7 has been completed, the value of the amounts payable under Section 7 shall be paid to the Participant's Beneficiary in a single lump sum as soon as is practicable after such Participant's death.

        (c)   Each Participant may designate, from time to time, a Beneficiary or Beneficiaries (who may be named contingently or successively) to whom any amounts which remain credited to the Participant's Account at the time of his or her death shall be paid. Each such designation shall revoke all prior designations by the same Participant, except to the extent otherwise specifically noted, shall be in a form prescribed by the Company and shall be effective only when filed by the Participant in writing with, and acknowledged by, the Company during his or her lifetime.

        9.    No Funding Required.

        (a)   Nothing in this Plan will be construed to create a trust or to obligate the Company or any other person to segregate a fund, purchase an insurance contract, or in any other way to fund currently the future payment of any benefits hereunder, nor will anything herein be construed to give any Participant or any other person rights to any specific assets of the Company or of any other person. Except as described in (b) below, any benefits which become payable hereunder shall be paid from the general assets of the Company.

        (b)   The Company in its sole discretion may establish a grantor or other trust of which the Company is treated as the owner under the Code, to provide for the payment of benefits hereunder, subject to the claims of the Company's general creditors in the event of insolvency, and subject to such other terms and conditions as the Company may deem necessary or advisable to ensure (i) that benefits are not includible, by reason of the establishment or funding of such trust, in the income of trust beneficiaries prior to actual distribution and (ii) that the existence of such trust does not cause the Plan or any other arrangement to be considered funded for purposes of Title I of ERISA.

        10.    Plan Administration and Interpretation.    The Company shall have complete control over the administration of the Plan and complete control and authority to determine, in its sole discretion, the rights and benefits and all claims, demands and actions arising out of the provisions of the Plan of any Participant, Beneficiary, or other person having or claiming to have any interest under the Plan and the Company's determinations shall be conclusive and binding on all such parties. The Company shall be deemed to be the Plan Administrator with the responsibility for complying with any reporting and disclosure requirements of ERISA. The rights of the Company hereunder shall be exercised by the Committee. To the extent that the Committee is unable or unwilling to exercise any right hereunder or

7

make any determination hereunder, however, the Board of Directors shall exercise such right or make such determination.

        11.    Claims Procedure.

        (a)   Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a "Claimant") may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 60 days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

        (b)   The Committee shall consider a Claimant's claim within 90 days, and shall notify the Claimant in writing:

          (i)  that the Claimant's requested determination has been made, and that the claim has been allowed in full; or

         (ii)  that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

        (A)  the specific reason(s) for the denial of the claim, or any part of it;

        (B)  specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

        (C)  a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

        (D)  an explanation of the claim review procedure set forth in this Section 11.

        (c)   Within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. Thereafter, but not later than 30 days after the review procedure began, the Claimant (or the Claimant's duly authorized representative):

          (i)  may review pertinent documents;

         (ii)  may submit written comments or other documents; and/or

        (iii)  may request a hearing, which the Committee, in its sole discretion, may grant.

        (d)   The Committee shall render its decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee's decision must be rendered within 120 days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

          (i)  specific reasons for the decision;

         (ii)  specific reference(s) to the pertinent Plan provisions upon which the decision was based; and

        (iii)  such other matters as the Committee deems relevant.

8

        (e)   A Claimant's compliance with the foregoing provisions of this Section 11 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan.

        12.    Non-Assignable.    Amounts payable under this Plan shall not be subject to alienation, assignment, garnishment, execution or levy of any kind, and any attempt to cause any such amount to be so subjected shall be null, void and of no effect and shall not be recognized by the Company.

        13.    Termination and Modification.    The Company may, by action of the Committee, terminate or amend this Plan by written notice to each Participant participating therein. A termination of the Plan shall have no effect other than to eliminate the right of each Participant to have additional amounts credited to his or her Account pursuant to Section 3. Except for such "prospective" termination, the Plan may not be amended, modified, waived, discharged or terminated, except by mutual consent of the Company and the Participant or Participants affected thereby, which consent shall be evidenced by an instrument in writing, signed by the party against which enforcement of such amendment, modification, waiver, discharge or termination is sought.

        14.    Parties.    The terms of this Plan shall be binding upon the Company, its successors or assigns and each Participant participating herein and his or her spouse, Beneficiaries, heirs, executors and administrators.

        15.    Liability of Company.    Subject to its obligation to pay the amount credited to the Participant's Account at the time distribution is called for by this Plan, neither the Company nor any person acting in behalf of the Company shall be liable to any Participant or any other person for any act performed or the failure to perform any act with respect to the Plan.

        16.    Notices.    Notices, elections or designations by a Participant to the Company hereunder shall be addressed to the Company to the attention of the Treasurer of the Company. Notices by the Company to a Participant shall be addressed to the Participant at his or her most recent home address as reflected in the records of the Company.

        17.    Withholding.    All payments under this Plan shall be net of tax withholding required by applicable Federal and state laws.

        18.    Unsecured General Creditors.    No Participant or his or her legal representative or any Beneficiary designated by him or her shall have any right, other than the right of an unsecured general creditor, against the Company in respect of the Account of such Participant established hereunder.

        19.    Effective Date.    This Plan shall be effective as of January 1, 1995, and shall continue in existence thereafter until terminated pursuant to Section 13. Notwithstanding the foregoing, this Plan shall be effective as of July 1, 1995 with respect to the Kendall employees, and this Plan shall be effective as of January 1, 1997 with respect to employees eligible to participate in the Tyco International (US) Inc. Retirement Savings and Investment Plan IV.

        20.    Governing Law.    This Plan shall be construed and enforced in accordance with, and governed by, the laws of the State of New Hampshire.

        IN WITNESS WHEREOF, this restated and amended Plan has been duly signed for and on behalf of the Company by a member of its Retirement Committee on the 30^th day of December, 2000.

TYCO INTERNATIONAL (US) INC.
By:	/s/  ROBERT BENT
	Robert Bent, Clerk Retirement Committee

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Appendix A

Measurement Funds at December 1, 2000

Bond Fund of America;

Fidelity Growth Company Fund;

Fidelity Puritan® Fund;

Franklin Small Cap Growth Fund I;

Interest Income Fund;

Neuberger & Berman Guardian Trust;

PIMCO Capital Appreciation Fund; and

U.S. Equity Index Commingled Pool;

Templeton Foreign Fund A.

Vanguard Windsor—II Fund

Janus Worldwide Fund

        Measurement funds will be deleted or added from time to time to reflect any changes made in the investment funds for the Savings Plan; provided, however, that none of the Fidelity Freedom Funds, the Tyco Stock Fund or any other fund designated as a non-core fund under the Savings Plan will be a Measurement Fund.

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TYCO INTERNATIONAL (US) INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EX-10.4

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Exhibit 10.4

SECOND AMENDMENT
TO
TYCO INTERNATIONAL (US) INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

A.    The Tyco International (US) Inc. Supplemental Executive Retirement Plan, as amended and restated as of April 1, 1999, and as amended by the First Amendment thereto, is hereby further amended by deleting Sections 5(a) and (b) thereof and inserting therefor the following:

        "5. Vesting.

        (a)   A Participant shall become fully vested in the full value of the amount credited to his or her Account upon attainment of age 55, death, Disability, completion of at least five Years of Service (three Years of Service for any Participant with an Hour of Service on or after January 1, 2002) or a Change in Control.

        (b)   A Participant whose employment with the Company or any Affiliated Entity terminates prior to attainment of age 55 (for any reason other than death or Disability) with fewer than the number of Years of Service required to be vested pursuant to (a) above will forfeit all amounts in his or her Account upon his or her termination of employment."

B.    The effective date of this amendment is January 1, 2002.

C.    Except as amended herein, the Plan is hereby confirmed in all other respects.

        IN WITNESS THEREFORE, this document has been signed on behalf of the Retirement Committee by its duly authorized representative this 14^th day of February, 2002.

TYCO INTERNATIONAL (US) INC. RETIREMENT COMMITTEE
By:	/s/  ROBERT A. BENT
	Robert A. Bent Clerk, Retirement Committee

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SECOND AMENDMENT TO TYCO INTERNATIONAL (US) INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EX-10.5

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Exhibit 10.5

THIRD AMENDMENT
TO
TYCO INTERNATIONAL (US) INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

A.

The Tyco International (US) Inc. Supplemental Executive Retirement Plan, as amended and restated as of April 1, 1999, and as amended by the First and Second Amendments thereto, is hereby further amended as follows:

        1.     Section 3 is amended by the addition of the following new Section 3(i).

        "(i)    With respect to each Participant who is listed on Appendix B to the Plan, the Company shall credit the amount set forth next to such Participant's name on the effective date indicated on said Appendix B."

        2.     A new Appendix B as set forth in the attachment to this Third Amendment, is hereby added to and made a part of the Plan.

B.

The effective date of this amendment is May 1 2002.

C.

Except as amended herein, the Plan is hereby confirmed in all other respects.

        IN WITNESS THEREFORE, this document has been signed on behalf of the Retirement Committee by its duly authorized representative this 30^th day of July, 2002.

TYCO INTERNATIONAL (US) INC. RETIREMENT COMMITTEE
By:	/s/  ROBERT A. BENT
	Robert A. Bent Clerk, Retirement Committee

APPENDIX B

Special Credits under Section 3(i)

Participant	Amount	Date of Credit
Dennis Crowley	$35,017.52 (US dollars)	July 1, 2002

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THIRD AMENDMENT TO TYCO INTERNATIONAL (US) INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
APPENDIX B
Special Credits under Section 3(i)

EX-10.6

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EXHIBIT 10.6

AMENDMENTS TO THE
TYCO INTERNATIONAL LTD.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

        Effective as of April 15, 2003, the Tyco Supplemental Executive Retirement Plan is amended as follows:

1.    Section 2(h) is amended to read as follows:

"Committee" means the Tyco International (US) Inc. Administrative Committee or any other person duly authorized by the Company or TIL who shall have authority to administer the Plan.

2.    Section 11 is amended and restated to read as follows:

11.    Claims Procedure.

        (a)    Presentation of Claim.    Any Participant or Beneficiary of a deceased Participant or their authorized representative (such Participant, Beneficiary or their authorized representative being referred to below as a "Claimant") may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 60 days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

        (b)    Notification of Decision.    The Committee shall consider a Claimant's claim within 90 days. If special circumstances apply, the 90-day period may be extended by an additional 90 days, provided that written notice of the extension is provided to the Claimant during the initial 90-day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Committee expects to render its decision on the claim.

        If the Committee wholly or partially denies the claim, the Committee shall provide written notice to the Claimant within the time limitations of the immediately preceding paragraph. Such notice shall set forth the extent to which the Committee has, in whole or in part, rejected the claim, and shall set forth, in a manner calculated to be understood by the Claimant:

        (A)    the specific reason(s) for the denial of the claim, or any part of it;

        (B)    specific reference(s) to pertinent provision(s) of the Plan upon which such denial was based;

        (C)    a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;

        (D)    an explanation of the claim review procedure set forth in (c) below; and

        (E)    a statement of the Claimant's right to bring a civil action under section 502(a) of ERISA if the claim denial is appealed to the Committee and the Committee fully or partially denies the claim.

        (c)    Review of a Denied Claim.    A Claimant whose application for benefits is denied may request a full and fair review of the decision denying the claim by filing, in accordance with such procedures as the Committee may establish, a written appeal which sets forth the documents, records, argument, and other information relating to the claim upon which the appeal is based within 60 days after receipt of the notice of the denial from the Committee. In connection with such appeal and upon written request by the Claimant, a Claimant may review (or receive free copies of) all documents, records, or other information relevant to the Claimant's claim for benefit, all in accordance with such procedures as the

Committee may establish. If a Claimant fails to file an appeal within such 60-day period, he or she will have no further right to appeal.

        (d)    Decision on Review.    A decision on the appeal by the Committee shall include a review by the Committee that takes into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial claim determination. The Committee shall render its decision on the appeal not later than 60 days after the receipt by the Committee of the appeal. If special circumstances apply, the 60-day period may be extended by an additional 60 days, provided that written notice of the extension is provided to the Claimant during the initial 60-day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Committee expects to render its decision on the claim on appeal.

        If the Committee wholly or partly denies the claim on appeal, the Committee shall provide written notice to the Claimant within the time limitations of the immediately preceding paragraph. Such notice shall set forth:

        (i)    the specific reasons for the denial of the claim;

        (ii)    specific reference to pertinent provisions of the Plan on which the denial is based;

        (iii)    a statement of the Claimant's right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits; and

        (iv)    a statement of the Claimant's right to bring a civil action under section 502(a) of ERISA.

        The foregoing claims procedures described in this Section 11 shall be administered in accordance with section 503 of ERISA and the regulations and guidance issued thereunder. Any written notice required to be given to the Claimant may, at the option of the Committee and in accordance with guidance issued under sections 503 and 102 of ERISA, be provided electronically.

        (e)    Legal Action.    A Claimant's compliance with the foregoing provisions of this Section 11 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan.

        (f)    Notwithstanding any other provision of this Plan to the contrary, the Company and/or TIL shall retain the authority to make decisions with respect to claims and appeals made by Participants whom the Company and/or TIL has claims against or might have claims against in the future based on wrongful acts committed by such Participants.

3.    Section 13 is hereby amended to read as follows:

        13.    Termination and Modification.    Either the Company, by action of the Board of Directors or any delegate thereof, or the Committee, may terminate or amend this Plan at any time. In the case of a Plan termination, the Committee will provide written notice to each Participant. A termination of the Plan shall have no effect other than to eliminate the right of each Participant to have additional amounts credited to his or her Account pursuant to Section 3. Except for such "prospective" termination, the Plan may not be amended, modified, waived, discharged or terminated, in a way which materially and adversely affects a Participant's previously accrued benefit, except by mutual consent of the Company and the Participant or Participants affected thereby, which consent shall be evidenced by an instrument in writing, signed by the party against which enforcement of such amendment, modification, waiver, discharge or termination is sought.

[Remainder of page intentionally left blank.]

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        IN WITNESS THEREFORE, this document has been signed on behalf of the Administrative Committee by its duly authorized representative this 24th day of December, 2003.

TYCO INTERNATIONAL (US) INC. ADMINISTRATIVE COMMITTEE
By:	/s/  JANE GREENMAN
	Jane Greenman Chairman, Adminstrative Committee

3

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AMENDMENTS TO THE TYCO INTERNATIONAL LTD. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EX-10.7

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Exhibit 10.7

DECEMBER 2003 AMENDMENT
TO
TYCO INTERNATIONAL (US) INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

A.    The Tyco International (US) Inc. Supplemental Executive Retirement Plan, Amended and Restated as of October 1, 2000, is hereby further amended by replacing existing Appendix B with a new Appendix B as set forth in the attachment to this December 2003 Amendment.

B.    The effective date of this amendment is January 1, 2003.

C.    Except as amended herein, the Plan is hereby confirmed in all other respects.

        IN WITNESS THEREFORE, this document has been signed on behalf of the Administrative Committee by its duly authorized representative this 24th day of December, 2003.

TYCO INTERNATIONAL (US) INC. ADMINISTRATIVE COMMITTEE
By:
	/s/  JANE GREENMAN Jane Greenman Chairman, Administrative Committee

APPENDIX B
Special Credits under Section 3(i)

Participant	Amount	Date of Credit
Dennis Crowley	$35,017.52 (US dollars)	July 1, 2002
Martina Hund-Mejean	$163,168.00 (US dollars)	As of January 1, 2003, and each January 1 thereafter through the earlier of (i) January 1, 2008, or (ii) the January 1 coincident with or preceding Ms. Mejean's termination of employment.

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DECEMBER 2003 AMENDMENT TO TYCO INTERNATIONAL (US) INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
APPENDIX B Special Credits under Section 3(i)

EX-10.8

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EXHIBIT 10.8

AMENDMENT NO. 2004-1 TO THE
TYCO INTERNATIONAL (US) INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

        WHEREAS, the Board of Directors (the "Board") of Tyco International (US) Inc. (the "Company") adopted the Tyco International (US) Inc. Supplemental Executive Retirement Plan (the "Plan"), amended and restated as of October 1, 2000, and maintains the Plan for the benefit of its and its affiliates' eligible employees;

        WHEREAS, certain disputes concerning benefits for former executives have arisen or are anticipated under the Plan (the "Claims");

        WHEREAS, the Administrative Committee has had the sole responsibility for the general administration of the Plan and of carrying out the provisions of the Plan, including resolution of claims;

        WHEREAS, pursuant to a resolution of the Board by unanimous written consent in December 2003 the Company created a special committee (the "Special Appeals Committee") to handle the Claims of senior officers where there have been allegations of wrongdoing, and authorized appropriate officers of the Company to amend the Plan accordingly;

        WHEREAS, any action taken in good faith by the Special Appeals Committee in the exercise of authority conferred upon it by the Board's resolution, under the Plan, or under a charter adopted by the Special Appeals Committee (the "Committee Charter") shall be conclusive and binding upon all Plan participants and their beneficiaries;

        NOW, THEREFORE, the Plan is hereby amended, as follows:

1.    Effective January 1, 2004, Plan Section 11 is deleted and the following is inserted:

        "11. Claims Procedure.

        (a)    Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a "Claimant") may deliver to the Committee, or to the committee designated by the Board to handle and adjudicate certain claims of senior officers where there have been allegations of wrongdoing (the "Special Appeals Committee") a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan (the applicable committee shall be referred to as the "Claims Committee"). If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 60 days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

        (b)    The Claims Committee shall consider a Claimant's claim within 90 days, unless special circumstances require additional time, and shall notify the Claimant in writing:

        (i)    that the Claimant's requested determination has been made, and that the claim has been allowed in full; or

        (ii)    that the Claims Committee has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

        (A)    the specific reason(s) for the denial of the claim, or any part of it;

        (B)    specific references(s) to pertinent provisions of the Plan upon which such denial was based;

        (C)    a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

        (D)    an explanation of the claim review procedure set forth in Section 11.

        (E)    a statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse determination on review.

        (c)    Within 60 days after receiving a notice from the Claims Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Claims Committee a written request for a review of the denial of the claim. Thereafter, but not later than 30 days after the review procedure began, the Claimant (or the Claimant's duly authorized representative):

        (i)    may review pertinent documents;

        (ii)    may submit written comments or other documents; and/or

        (iii)    may request a hearing, which the Claims Committee, in its sole discretion, may grant.

The Claimant (or the Claimant's duly authorized representative) shall be provided, upon request and without charge, reasonable access to and copies of, all documents, records or other information relevant to the claim. The Claimant (or the Claimant's duly authorized representative) shall also be permitted to submit to the Claims Committee documents, records and other information relating to the claim.

        (d)    The Claims Committee shall render its decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Claims Committee's decision must be rendered within 120 days after such date. If an extension of time is required due to special circumstances, the Claimant shall be notified in writing, by the Claims Committee prior to the termination of the initial 60-day period. The extension notice shall indicate the special circumstances requiring extension and the date by which the Claims Committee expects to render a decision on the claim. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

        (i)    specific reasons for the decision;

        (ii)    specific reference(s) to the pertinent Plan provisions upon which the decision was based;

        (iii)    the Claimant's right to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to his claim;

        (iv)    a statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA; and

        (v)    such other matters as the Special Appeals Committee deems relevant.

        (e)    A claimant's compliance with the foregoing provisions of this Section 11 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan.

        (f)    Any action taken in good faith by the Claims Committee in the exercise of its authority shall be conclusive and binding upon all Plan participants and their beneficiaries.

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        IN WITNESS WHEREOF, the Company has caused this Amendment 2004-1 to be executed this 30th day of April, 2004.

TYCO INTERNATIONAL (US), INC.
By:	/s/  LAURIE SIEGEL
	Laurie Siegel Senior Vice President Human Resources

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AMENDMENT NO. 2004-1 TO THE TYCO INTERNATIONAL (US) INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EX-10.17

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Exhibit 10.17

FIRST AMENDMENT TO THE EXECUTIVE EMPLOYMENT AGREEMENT

        The First Amendment to the Executive Employment Agreement, dated as of September 18, 2004, (the "First Amendment") by and between David J. FitzPatrick (the "Executive") and Tyco International Ltd., a Bermuda corporation (the "Company").

WITNESSETH:

        WHEREAS, the Company and The Executive entered into an Executive Employment Agreement dated as of September 18, 2002 (the "Agreement");

        WHEREAS, the Company and the Executive desire to amend the Agreement to update the terms to reflect developments since the Effective Date.

        NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

        Section 1. Each capitalized term used in this First Amendment and not otherwise defined herein shall have the definitions assigned thereto in the Agreement.

        Section 2. The parties agree that effective as of the date of this First Amendment (the "Renewal Date"), the Agreement is hereby amended as follows:

Paragraph 3 of the Agreement is amended to delete the first sentence and replace it with the following sentence:

"As of the Renewal Date, the Company agrees to pay the Executive a base salary (the "Base Salary") at an annual rate of not less than US $780,000, payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly."

Paragraph 6 (d) is amended to delete the first sentence and replace it with the following sentence:

"The Company shall provide to the Executive a Flex-Perq Allowance pursuant to the Tyco Flexible Perquisite Plan for US Executives paid in four quarterly installments to be used at the Executive's discretion to pay for items not otherwise covered under the Company's benefit programs or expense reimbursement policies and practices. The Executive's annual Flex-Perq Allowance amount is US $70,000. All normal tax withholding applies; however, federal taxes will be withheld at the supplemental rate."

Paragraph 6(f) of the Agreement is hereby amended by adding the underlined language in the second sentence of the paragraph as follows:

"The parties recognize that such security protection may include use by the Executive and his family of private transportation methods, including private air travel, for both business and personal purposes subject to the provisions and requirements of the Company's Corporate Aircraft Policy."

Section 6(g) is hereby deleted and the parties hereby acknowledge that the Executive's relocation is complete and all relocation benefits have been paid by the Company to the Executive.

Section 6(h) is hereby deleted and the parties hereby acknowledge that the Flex-Perq allowance is paid by the Company in lieu of reimbursement for financial counseling and tax preparation costs for the Executive.

        Section 3. Except as expressly modified and amended hereby, the Agreement shall continue to be and shall remain in full force and effect in accordance with its terms. The general provisions set forth in Agreement shall pertain with full force and effect to the First Amendment including without

limitation Sections 12 through 24 and any references to the Agreement shall be read to include the First Amendment thereto.

        Section 4. The First Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date first above written.

	TYCO INTERNATIONAL LTD.
/s/  DAVID J. FITZPATRICK DAVID J. FITZPATRICK	/s/ EDWARD D. BREEN By:  EDWARD D. BREEN

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FIRST AMENDMENT TO THE EXECUTIVE EMPLOYMENT AGREEMENT

EX-10.19

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EXHIBIT 10.19

FIRST AMENDMENT TO THE EXECUTIVE EMPLOYMENT AGREEMENT

        The First Amendment to the Executive Employment Agreement, dated as of September 30, 2004, (the "First Amendment") by and between William B. Lytton (the "Executive") and Tyco International Ltd., a Bermuda corporation (the "Company").

WITNESSETH:

        WHEREAS, the Company and The Executive entered into an Executive Employment Agreement dated as of September 30, 2002 (the "Agreement");

        WHEREAS, the Company and the Executive desire to amend the Agreement to update the terms to reflect developments since the Effective Date.

        NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

        Section 1.Each capitalized term used in this First Amendment and not otherwise defined herein shall have the definitions assigned thereto in the Agreement.    

        Section 2.The parties agree that effective as of the date of this First Amendment (the "Renewal Date"), the Agreement is hereby amended as follows:    

Pargraph 3 of the Agreement is amended to delete the first sentence and replace it with the following sentence:

"As of the Renewal Date, the Company agrees to pay the Executive a base salary (the "Base Salary") at an annual rate of not less than US $675,000, payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly."

Paragraph 6 (d) is amended to delete the first sentence and replace it with the following sentence:

"The Company shall provide to the Executive a Flex-Perq Allowance pursuant to the Tyco Flexible Perquisite Plan for US Executives paid in four quarterly installments to be used at the Executive's discretion to pay for items not otherwise covered under the Company's benefit programs or expense reimbursement policies and practices. The Executive's annual Flex-Perq Allowance amount is US $67,500. All normal tax withholding applies; however, federal taxes will be withheld at the supplemental rate."

Paragraph 6(f) of the Agreement is hereby amended by adding the underlined language in the second sentence of the paragraph as follows:

"The parties recognize that such security protection may include use by the Executive and his family of private transportation methods, including private air travel, for both business and personal purposes subject to the provisions and requirements of the Company's Corporate Aircraft Policy."

Section 6(g) is hereby deleted and the parties hereby acknowledge that the Executive's relocation is complete and all relocation benefits have been paid by the Company to the Executive.

Section 6(h) is hereby deleted and the parties hereby acknowledge that the Flex-Perq allowance is paid by the Company in lieu of reimbursement for financial counseling and tax preparation costs for the Executive.

        Section 3.Except as expressly modified and amended hereby, the Agreement shall continue to be and shall remain in full force and effect in accordance with its terms. The general provisions set forth in Agreement shall pertain with full force and effect to the First Amendment including without limitation Sections 12 through 24 and any references to the Agreement shall be read to include the First Amendment thereto.    

        Section 4.The First Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.    

        IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date first above written.

	TYCO INTERNATIONAL LTD.
/s/ WILLIAM B. LYTTON WILLIAM B. LYTTON	/s/ EDWARD D. BREEN By:  EDWARD D. BREEN

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FIRST AMENDMENT TO THE EXECUTIVE EMPLOYMENT AGREEMENT

EX-10.26

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EXHIBIT 10.26

AMENDMENT
TO
TYCO INTERNATIONAL LTD.
2004 STOCK AND INCENTIVE PLAN

        The Tyco International Ltd. 2004 Stock and Incentive Plan (the "Stock and Incentive Plan") is hereby amended, effective as of October 1, 2004, to clarify the rules applicable to the award of Annual Performance Bonuses.

1.

The definition of "Performance Measure" under Article II of the Stock and Incentive Plan is amended by deleting clause (g) thereof and adding the following in place thereof:

(g)    Earnings before interest and taxes;

2.

Article II of the Stock and Incentive Plan is further amended by adding the following definition thereto:

"Maximum Amount" means the maximum amount that will be paid to a Reporting Person as an Annual Performance Bonus.

3.

Paragraph (i) of subsection (c) of Section 4.4 of the Stock and Incentive Plan is amended to read as follows:

(i)    Within 90 days after the commencement of a Performance Cycle, the Committee will fix and establish in writing the Performance Measures that will apply to that Performance Cycle and the Maximum Amount payable to each Participant. The Committee will also set forth the minimum level of performance, based on objective factors, that must be attained during the Performance Cycle before any Annual Performance Bonus will be paid and, if applicable, the percentage of the Maximum Amount will become payable upon attainment of various levels of performance that equal or exceed the minimum required level.

4.

Subsection (g) of Section 4.4 of the Stock and Incentive Plan is amended to read as follows:



(g)

Acceleration.    Each Participant who has been granted an Annual Performance Bonus that is outstanding as of the date of a Change in Control will be deemed to have achieved a level of performance, as of the date of Change in Control, that would cause the Participant's Maximum Amount to become payable.

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AMENDMENT TO TYCO INTERNATIONAL LTD. 2004 STOCK AND INCENTIVE PLAN

EX-10.27

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Exhibit 10.27

Tyco International Ltd.
2004 Stock and Incentive Plan

TERMS AND CONDITIONS
OF
OPTION AWARD

        OPTION AWARD made in Princeton, New Jersey, as of                        .

        1.Grant of Option.    The Company has granted you an Option to purchase the number of Shares of Common Stock set forth in your Grant Letter, subject to the provisions of these Terms and Conditions. This Option is a nonqualified Option.

        2.Exercise Price.    The purchase price of the Shares covered by the Option is set forth in your Grant Letter.

        3.Vesting.    Except in the event of your Normal Retirement (Termination of Employment on or after age 60 if the sum of your age and years of service with the Company is at least 70), Retirement (Termination of Employment on or after age 55 if the sum of your age and years of service with the Company is at least 60), Termination of Employment, death, Disability or a Change in Control, the Option will become exercisable in cumulative installments as follows: one third (¹/3) of the Shares specified in your Grant Letter, one (1) year from the Grant Date (as set forth in your Grant Letter); an additional one third (¹/3) of the Shares, two (2) years from the Grant Date; and the remaining one third (¹/3), three (3) years from the Grant Date. Your vested right will be calculated on the anniversary of the Grant Date. No credit will be given for periods following Termination of Employment, except as specifically provided herein.

        4.Term of Option.    The Option must be exercised prior to the close of the New York Stock Exchange ("NYSE") on the day prior to the 10^th anniversary of the Grant Date, subject to earlier termination or cancellation as provided in paragraphs 7 or 8 of these Terms and Conditions. If the NYSE is not open for business on the expiration date specified, the Option will expire at the close of the NYSE's next business day.

        5.Payment of Exercise Price.    You may pay the Exercise Price by cash, certified check, bank draft, wire transfer or postal or express money order. Alternatively, payment may be made by one or more of the following methods: (i) delivering to the Company a properly executed exercise notice, together with irrevocable instructions to a broker to deliver promptly to the Company sale or loan proceeds adequate to satisfy the portion of the Exercise Price being so paid; (ii) if expressly approved by the Board of Directors, tendering to the Company (by physical delivery or attestation) certificates of Common Stock that you have held for six (6) months or longer (unless the Compensation and Human Resources Committee (the "Committee"), in its discretion, waives this 6-month period) and that have an aggregate Fair Market Value as of the day prior to the date of exercise equal to the portion of the Exercise Price being so paid; or (iii) if such form of payment is expressly authorized by the Board of Directors or the Committee, instructing the Company to withhold Shares that would otherwise be issued were the Exercise Price to be paid in cash and that have an aggregate Fair Market Value as of the date of exercise equal to the portion of the Exercise Price being so paid. Notwithstanding the foregoing, you may not tender any form of payment that the Company determines, in its sole and absolute discretion, could violate any law or regulation. You are not required to purchase all Shares subject to the Option at one time, but you must pay the full Exercise Price for all Shares that you elect to purchase before they will be delivered.

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        6.Exercise of Option.    Subject to the terms and conditions of these Terms and Conditions, the Option may be exercised by contacting Smith Barney at 866-678-8926 if calling from within the U.S. or 001-212-615-7811 if calling from outside the U.S. If the Option is exercised after your death, the Company will deliver Shares only after the Committee has determined that the person exercising the Option is the duly appointed executor or administrator of your estate or the person to whom the Option has been transferred by your will or by the applicable laws of descent and distribution.

        7.Retirement, Termination of Employment, Disability or Death.    The Option will vest and remain exercisable as set forth below, or as provided in the Plan in the case of Normal Retirement (as defined in paragraph 3), Disability or death:

Event	Vesting	Exercise
Voluntary Termination of Employment (other than Retirement or Normal Retirement)	Unvested Awards are forfeited as of Termination of Employment.	Vested Awards expire on earlier of (i) original expiration date, or (ii) 90 days after Termination of Employment.
Involuntary Termination of Employment not for Cause	Unvested Awards are forfeited as of Termination of Employment.	Vested Awards expire on earlier of (i) original expiration date, or (ii) 90 days after Termination of Employment.
Involuntary Termination of Employment for Cause	Unvested Awards are forfeited as of Termination of Employment.	Vested Awards are immediately cancelled upon Termination of Employment.
Retirement (as defined in paragraph 3)	Unvested Awards are forfeited if you retire from active employment less than 12 months after Grant Date. On or after the 1st anniversary of Grant Date, Award vests pro rata (rounded to the nearest full year increment) based on the portion of the three year vesting term that you have completed prior to Termination.	Vested Awards expire earlier of (i) original expiration date, or (ii) 3 years after Retirement.

        8.Change in Control.    In the event of a Change in Control, your Option will immediately become fully vested. Your Option will expire on the earlier of (i) the original expiration date or (ii) three (3) years from your Termination of Employment following the date of Change in Control.

        9.Withholdings.    The Company will have the right, prior to the issuance or delivery of any Shares in connection with the exercise of the Option, to withhold or demand from you the amount necessary to satisfy applicable tax requirements, as determined by the Committee. The methods described in paragraph 5 may also be used to pay your withholding tax obligation.

        10.Transfer of Option.    You may not transfer the Option or any interest in the Option except by will or the laws of descent and distribution. Notwithstanding the foregoing, you may transfer the Option to members of your immediate family or to one or more trusts for the benefit of family members or to one or more partnerships in which the family members are the only partners, provided that (i) you do not receive any consideration for the transfer, (ii) you furnish the Committee or its designee with detailed written notice of the transfer at least three (3) business days in advance, and (iii) the Committee or its designee consents in writing. For this purpose, "family member" means any spouse, children, grandchildren, parents, grandparents, siblings, nieces, nephews and grandnieces and grandnephews, including adopted, in-laws and step family members. Any Option transferred pursuant

2

to this provision will continue to be subject to the same terms and conditions that were applicable to the Option immediately prior to transfer. The Option may be exercised by the transferee only to the same extent that you could have exercised the Option had no transfer occurred.

11.   Covenant; Forfeiture of Award.

        (a)   If the Committee determines, in its sole judgment, that prior to the second anniversary of your Termination of Employment you have entered into an employment or consultation arrangement (including any arrangement for employment or service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business if (i) such employment or consultation arrangement would likely (in the sole judgment of the Committee) result in the disclosure of business confidential or proprietary information related to any business of the Company or a Subsidiary, or (ii) such business is competitive with any Company or Subsidiary business as to which you have had access to business strategic or confidential information, and if the Committee has not approved the arrangement in writing, any Option that you have not exercised (whether vested or unvested) will immediately be rescinded, and you will forfeit any rights you have with respect to these Options as of the date of the Committee's determination.

        (b)   If you have been terminated for Cause, any unvested stock options shall be immediately rescinded and, in addition, you hereby agree and promise immediately to deliver to the Company Shares (or, in the discretion of the Committee, cash) equal in value to the amount of any profit you realized upon an exercise of the Option during the period beginning six (6) months prior to your Termination of Employment and ending on the second anniversary of your Termination of Employment.

        12.Adjustments.    In the event of any stock split, reverse stock split, dividend or other distribution (whether in the form of cash, Shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange of Shares or other securities, the issuance of warrants or other rights to purchase Shares or other securities, or other similar corporate transaction or event, the Committee may, in its sole discretion, adjust the number and kind of Shares covered by the Option, the Exercise Price and other relevant provisions to the extent necessary to prevent dilution or enlargement of the benefits or potential benefits intended to be provided by the Option. Any such determinations and adjustments made by the Committee will be binding on all persons.

        13.Restrictions on Exercise.    Exercise of the Option is subject to the conditions that, to the extent required at the time of exercise, (a) the Shares covered by the Option will be duly listed, upon official notice of issuance, upon the NYSE, and (b) a Registration Statement under the Securities Act of 1933 with respect to the Shares will be effective or an exemption from registration will apply. The Company will not be required to deliver any Common Stock until all applicable federal and state laws and regulations have been complied with and all legal matters in connection with the issuance and delivery of the Shares have been approved by counsel of the Company.

        14.Disposition of Securities.    By accepting the Award, you acknowledge that you have read and understand the Company's policy, and are aware of and understand your obligations under federal securities laws with respect to trading in the Company's securities, and you agree not to use the Company's "cashless exercise" program (or any successor program) at any time when you possess material nonpublic information with respect to the Company or when using the program would otherwise result in a violation of securities law. The Company will have the right to recover, or receive reimbursement for, any compensation or profit realized on the exercise of the Option or by the disposition of Shares received upon exercise of the Option to the extent that the Company has a right of recovery or reimbursement under applicable securities laws.

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        15.Plan Terms Govern.    The exercise of the Option, the disposition of any Shares received upon exercise of the Option, and the treatment of any gain on the disposition of these Shares are subject to the terms of the Plan and any rules that the Committee may prescribe. The Plan document, as may be amended from time to time, is incorporated into these Terms and Conditions. Capitalized terms used in these Terms and Conditions have the meaning set forth in the Plan, unless otherwise stated in these Terms and Conditions. In the event of any conflict between the terms of the Plan and the terms of these Terms and Conditions, the Plan will control. By accepting the Award, you acknowledge receipt of the Plan, as in effect on the date of these Terms and Conditions.

        16.Personal Data.    To comply with applicable law and to administer the Plan and these Terms and Conditions properly, the Company and its agents may hold and process your personal data and/or sensitive personal data. Such data includes, but is not limited to, the information provided in this grant package and any changes thereto, other appropriate personal and financial data about you, and information about your participation in the Plan and Shares obtained under the Plan from time to time. By accepting the Award, you hereby give your explicit consent to the Company's processing any such personal data and/or sensitive personal data. You also hereby give your explicit consent to the Company's transfer of any such personal data and/or sensitive personal data outside the country in which you work or reside and to the United States. The legal persons for whom your personal data are intended include the Company and any of its Subsidiaries, the outside Plan administrator as selected by the Company from time to time, and any other person that the Company may find in its administration of the Plan to be appropriate. You have the right to review and correct your personal data by contacting your local Human Resources Representative. You understand that the transfer of the information outlined here is important to the administration of the Plan, and that failure to consent to the transmission of such information may limit or prohibit your participation in the Plan.

        17.No Contract of Employment or Promise of Future Grants.    By accepting the Award, you agree to be bound by the terms and conditions of these Terms and Conditions and acknowledge that the Award is granted at the sole discretion of the Company and is not considered part of any contract of employment with the Company or of your ordinary or expected salary or other compensation and will not be considered as part of such salary or compensation for purposes of any pension benefits or in the event of severance, redundancy or resignation. If your employment with the Company or a Subsidiary is terminated for any reason, whether lawfully or unlawfully, you agree that you will not be entitled by way of damages for breach of contract, dismissal or compensation for loss of office or otherwise to any sum, shares or other benefits to compensate you for the loss or diminution in value of any actual or prospective rights, benefits or expectation under or in relation to the Plan.

        18.Limitations.    Nothing in these Terms and Conditions or the Plan gives you any right to continue in the employ of the Company or any of its Subsidiaries or to interfere in any way with the right of the Company or any Subsidiary to terminate your employment at any time. Payment of Shares is not secured by a trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of the Option. You have no rights as a stockholder of the Company pursuant to the Option until Shares are actually delivered you.

        19.Incorporation of Other Agreements.    These Terms and Conditions and the Plan constitute the entire understanding between you and the Company regarding the Option. These Terms and Conditions supersedes any prior agreements, commitments or negotiations concerning the Option.

        20.Severability.    The invalidity or unenforceability of any provision of these Terms and Conditions will not affect the validity or enforceability of the other provisions of these Terms and Conditions, which will remain in full force and effect. Moreover, if any provision is found to be excessively broad in duration, scope or covered activity, the provision will be construed so as to be enforceable to the maximum extent compatible with applicable law.

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        By accepting this Award, you agree to the following:

        (i)    you have carefully read, fully understand and agree to all of the terms and conditions described in these Terms and Conditions and the Plan; and

        (ii)   you understand and agree that these Terms and Conditions and the Plan constitute the entire understanding between you and the Company regarding the Option, and that any prior agreements, commitments or negotiations concerning the Option are replaced and superseded.

        You will be deemed to consent to the application of the terms and conditions set forth in these Terms and Conditions and the Plan unless you contact Tyco International Ltd., c/o Executive Compensation, 9 Roszel Road, Princeton, NJ 08540 in writing within thirty (30) days of the date of these Terms and Conditions. Notification of your non-consent will nullify this grant unless otherwise agreed to in writing by you and the Company.

Tyco International Ltd.

5

Tyco International Ltd.
2004 Stock and Incentive Plan

TERMS AND CONDITIONS
OF
RESTRICTED STOCK AWARD

        RESTRICTED STOCK AWARD made in Princeton, New Jersey, as of                        .

        1.Grant of Award.    The Company has granted you Shares of Restricted Stock, the amount of which is set forth in your Grant Letter, subject to the provisions of these Terms and Conditions.

        2.Vesting.    Except in the event of your Normal Retirement (Termination of Employment on or after age 60 if the sum of your age and years of service with the Company is at least 70), Retirement (Termination of Employment on or after age 55 if the sum of your age and years of service with the Company is at least 60), Termination of Employment, death or Disability or a Change in Control, all restrictions on the Restricted Stock will lapse three (3) years from the Grant Date. Your vested right will be calculated on the anniversary of the Grant Date. No credit will be given for periods following Termination of Employment, except as specifically provided herein.

        3.Dividends.    Restricted Stock is Common Stock. For each Share of Restricted Stock, whether vested or unvested, you will be paid any cash or stock dividends distributed by the Company at the same time as any other holder of Common Stock.

        4.Termination of Employment.    Any Shares of Restricted Stock that have not vested as of your Termination of Employment, other than as set forth in paragraphs 5, 6 and 7, will immediately be forfeited, and your rights with respect to these Shares will end.

        5.Death or Disability.    If your employment with the Company terminates because of your death or Disability, your Restricted Stock will immediately become fully vested. If you are deceased, the Company will make a payment to your estate only after the Compensation and Human Resources Committee (the "Committee") has determined that the payee is the duly appointed executor or administrator of your estate.

        6.Retirement.    If your employment with the Company terminates because of your Retirement (as defined in paragraph 2) 12 or more months after the Grant Date, your Restricted Stock will vest pro rata (in full-year increments) with respect to the portion of the three (3)-year term that you have completed. If your employment with the Company terminates because of your Retirement less than 12 months after the Grant Date, your Restricted Stock will immediately be forfeited. If your employment with the Company terminates because of your Normal Retirement (as defined in paragraph 2), your Restricted Stock will immediately become fully vested.

        7.Change in Control.    In the event of a Change in Control, your Restricted Stock will immediately become fully vested.

        8.Withholdings.    The Company will have the right, prior to the release of restrictions on your Restricted Stock to withhold or require from you the amount necessary to satisfy applicable tax requirements, as determined by the Committee, or at an earlier time if you make an election pursuant to Section 83(b) of the Internal Revenue Code (the "Code").

        9.Transfer of Award.    You may not transfer any interest in your Restricted Stock until the restrictions lapse or are satisfied. After your Shares of Restricted Stock have vested, they may be freely transferred, unless you are an affiliate of the Company, in which case you may dispose of your Shares only pursuant to an effective registration statement under the Securities Act of 1933 (the "Securities Act") or an exemption from the registration requirement. An "affiliate", as defined in the Securities Act, is generally a person who directly or indirectly controls the Company, such as a member of the Board of Directors or a senior officer.

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        10.Covenant; Forfeiture of Award.

        (a)   If the Committee determines, in its sole judgment, that prior to the second anniversary of your Termination of Employment you have entered into an employment or consultation arrangement (including any arrangement for employment or service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business if (i) such employment or consultation arrangement would likely (in the sole judgment of the Committee) result in the disclosure of business confidential or proprietary information related to any business of the Company or a Subsidiary, or (ii) such business is competitive with any Company or Subsidiary business as to which you have had access to business strategic or confidential information, and if the Committee has not approved the arrangement in writing, any unvested Shares of your Restricted Stock will immediately be rescinded, and you will forfeit any rights you have with respect to these Shares as of the date of the Committee's determination.

        (b)   If you have been terminated for Cause, any unvested shares of restricted stock shall be immediately rescinded and, in addition, you hereby agree and promise immediately to deliver to the Company Shares (or, in the discretion of the Committee, cash) equal in value to the value of any Shares of your Restricted Stock that vested during the period beginning six (6) months prior to your Termination of Employment and ending on the second anniversary of your Termination of Employment.

        11.Disposition of Securities.    By accepting the Award, you acknowledge that you have read and understand the Company's policy, and are aware of and understand your obligations under federal securities laws with respect to trading in the Company's securities. The Company will have the right to recover, or receive reimbursement for, any compensation or profit realized on the disposition of Shares received as Restricted Stock to the extent that the Company has a right of recovery or reimbursement under applicable securities laws.

        12.Section 83(b) Election.    You may elect to pay tax on your Restricted Stock as of the time your Shares are granted rather than when they vest by filing an election under Section 83(b) of the Code with the Internal Revenue Service within 30 days from the Grant Date. By accepting the Award, you acknowledge that it is solely your responsibility to file timely any election under Section 83(b), even if you request the assistance of the Company or its representatives to do so. If you file a Section 83(b) election pursuant to this paragraph 12, you must give a copy of your completed election form to the Company within five business days of the date on which you made the filing at the following address: Tyco International Ltd., c/o Executive Compensation, 9 Roszel Road, Princeton, NJ 08544.

        13.Plan Terms Govern.    The grant of Restricted Stock, the disposition of any Shares of Restricted Stock, and the treatment of gain on the disposition of these Shares are subject to the provisions of the Plan and any rules that the Committee may prescribe. The Plan document, as may be amended from time to time, is incorporated into these Terms and Conditions. Capitalized terms used in these Terms and Conditions have the meaning set forth in the Plan, unless otherwise stated in these Terms and Conditions. In the event of any conflict between the terms of the Plan and the terms of these Terms and Conditions, the Plan will control. By accepting the Award, you acknowledge receipt of the Plan and the prospectus, as in effect on the date of these Terms and Conditions.

        14.Personal Data.    To comply with applicable law and to administer the Plan and these Terms and Conditions properly, the Company and its agents may hold and process your personal data and/or sensitive personal data. Such data includes, but is not limited to, the information provided in this grant package and any changes thereto, other appropriate personal and financial data about you, and information about your participation in the Plan and Shares obtained under the Plan from time to time. By accepting the Award, you hereby give your explicit consent to the Company's processing any such personal data and/or sensitive personal data. You also hereby give your explicit consent to the Company's transfer of any such personal data and/or sensitive personal data outside the country in which you work or reside and to the United States. The legal persons for whom your personal data are intended include the Company and any of its Subsidiaries, the outside Plan administrator as selected by

2

the Company from time to time, and any other person that the Company may find in its administration of the Plan to be appropriate. You have the right to review and correct your personal data by contacting your local Human Resources Representative. You understand that the transfer of the information outlined here is important to the administration of the Plan, and that failure to consent to the transmission of such information may limit or prohibit your participation in the Plan.

        15.No Contract of Employment or Promise of Future Grants.    By accepting the Award, you agree to be bound by the terms and conditions of these Terms and Conditions and acknowledge that the Award is granted at the sole discretion of the Company and is not considered part of any contract of employment with the Company or of your ordinary or expected salary or other compensation and will not be considered as part of such salary or compensation for purposes of any pension benefits or in the event of severance, redundancy or resignation. If your employment with the Company or a Subsidiary is terminated for any reason, whether lawfully or unlawfully, you agree that you will not be entitled by way of damages for breach of contract, dismissal or compensation for loss of office or otherwise to any sum, shares or other benefits to compensate you for the loss or diminution in value of any actual or prospective rights, benefits or expectation under or in relation to the Plan.

        16.Limitations.    Nothing in these Terms and Conditions or the Plan gives you any right to continue in the employ of the Company or any of its Subsidiaries or to interfere in any way with the right of the Company or any Subsidiary to terminate your employment at any time.

        17.Incorporation of Other Agreements.    These Terms and Conditions and the Plan constitute the entire understanding between you and the Company regarding the Restricted Stock. These Terms and Conditions supersedes any prior agreements, commitments or negotiations concerning the Restricted Stock.

        18.Severability.    The invalidity or unenforceability of any provision of these Terms and Conditions will not affect the validity or enforceability of the other provisions of these Terms and Conditions, which will remain in full force and effect. Moreover, if any provision is found to be excessively broad in duration, scope or covered activity, the provision will be construed so as to be enforceable to the maximum extent compatible with applicable law.

        By accepting this Award, you agree to the following:

        (i)    you have carefully read, fully understand and agree to all of the terms and conditions described in these Terms and Conditions and the Plan; and

        (ii)   you understand and agree that these Terms and Conditions and the Plan constitute the entire understanding between you and the Company regarding the Award, and that any prior agreements, commitments or negotiations concerning the Restricted Stock are replaced and superseded.

        You will be deemed to consent to the application of the terms and conditions set forth in these Terms and Conditions and the Plan unless you contact Tyco International Ltd., c/o Executive Compensation, 9 Roszel Road, Princeton, NJ 08540 in writing within thirty (30) days of the date of these Terms and Conditions. Notification of your non-consent will nullify this grant unless otherwise agreed to in writing by you and the Company.

Tyco International Ltd.

3

Tyco International Ltd.
2004 Stock and Incentive Plan
TERMS AND CONDITIONS
OF
RESTRICTED UNIT AWARD

        RESTRICTED UNIT AWARD made in Princeton, New Jersey, as of                        .

        1.Grant of Award.    The Company has granted you Restricted Units, the amount of which is set forth in your Grant Letter, subject to the provisions of these Terms and Conditions. The Company will hold the Restricted Units in a bookkeeping account on your behalf until they become payable or are forfeited or cancelled.

        2.Payment Amount.    Each Restricted Unit represents one (1) Share of Common Stock.

        3.Form of Payment.    Vested Restricted Units will be redeemed solely for Shares, provided that the Committee, in its sole discretion, may elect to pay for vested Restricted Units solely in cash or in a combination of Shares and cash. If a cash payment is made, the amount of cash paid in lieu of Shares will be determined by the Fair Market Value of Common Stock as of the date on which the restrictions on the Restricted Units lapse or terminate or, if no sale of Shares is reported on this date, on the next preceding day on which a sale of Shares was reported.

        4.Vesting.    Except in the event of your Normal Retirement (Termination of Employment on or after age 60 if the sum of your age and years of service with the Company is at least 70), Retirement (Termination of Employment on or after age 55 if the sum of your age and years of service with the Company is at least 60), Termination of Employment, death or Disability or a Change in Control, all restrictions on the Restricted Units will lapse three (3) years from the Grant Date. Your vested right will be calculated on the anniversary of the Grant Date. No credit will be given for periods following Termination of Employment, except as specifically provided herein.

        5.Termination of Employment.    Any Restricted Units that have not vested as of your Termination of Employment, other than as set forth in paragraphs 6, 7 and 8, will immediately be forfeited, and your rights with respect to these Restricted Units will end.

        6.Death or Disability.    If your employment with the Company terminates because of your death or Disability, your Award will immediately become fully vested. If you are deceased, the Company will make a payment to your estate only after the Committee has determined that the payee is the duly appointed executor or administrator of your estate.

        7.Retirement.    If your employment with the Company terminates because of your Retirement (as defined in paragraph 4) 12 or more months after the Grant Date, your Restricted Stock will vest pro rata (in full-year increments) with respect to the portion of the three (3)-year term that you have completed. If your employment with the Company terminates because of your Retirement less than 12 months after the Grant Date, your Restricted Units will immediately be forfeited. If your employment with the Company terminates because of your Normal Retirement (as defined in paragraph 4), your Restricted Units will immediately become fully vested.

        8.Change in Control.    In the event of a Change in Control, your Restricted Units will immediately become fully vested.

        9.Withholdings.    The Company will have the right, prior to any issuance or delivery of Shares on your Restricted Units (or the payment of cash in lieu of Shares), to withhold or require from you the amount necessary to satisfy applicable tax requirements, as determined by the Committee.

        10.Transfer of Award.    You may not transfer any interest in Restricted Units except by will or the laws of descent and distribution. Any other attempt to dispose of your interest in Restricted Units will be null and void.

1

        11.Covenant; Forfeiture of Award.

        (a)   If the Committee determines, in its sole judgment, that prior to the second anniversary of your Termination of Employment you have entered into an employment or consultation arrangement (including any arrangement for employment or service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business if (i) such employment or consultation arrangement would likely (in the sole judgment of the Committee) result in the disclosure of business confidential or proprietary information related to any business of the Company or a Subsidiary, or (ii) such business is competitive with any Company or Subsidiary business as to which you have had access to business strategic or confidential information, and if the Committee has not approved the arrangement in writing, any unvested Restricted Unit will immediately be rescinded, and you will forfeit any rights you have with respect to these Restricted Units as of the date of the Committee's determination.

        (b)   If you have been terminated for Cause, any unvested restricted units shall be immediately rescinded and, in addition, you hereby agree and promise immediately to deliver to the Company Shares (or, in the discretion of the Committee, cash) equal in value to the amount of any payments you received for Restricted Units that vested during the period beginning six (6) months prior to your Termination of Employment and ending on the second anniversary of your Termination of Employment.

        12.Adjustments.    In the event of any stock split, reverse stock split, dividend or other distribution (whether in the form of cash, Shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange of Shares or other securities, the issuance of warrants or other rights to purchase Shares or other securities, or other similar corporate transaction or event, the Committee may, in its sole discretion, adjust the number and kind of Shares covered by the Restricted Units and other relevant provisions to the extent necessary to prevent dilution or enlargement of the benefits or potential benefits intended to be provided by the Restricted Units. Any such determinations and adjustments made by the Committee will be binding on all persons.

        13.Restrictions on Payment of Shares.    Payment of Shares for your Restricted Units is subject to the conditions that, to the extent required at the time of exercise, (a) the Shares underlying the Restricted Units will be duly listed, upon official notice of redemption, upon the NYSE, and (b) a Registration Statement under the Securities Act of 1933 with respect to the Shares will be effective. The Company will not be required to deliver any Common Stock until all applicable federal and state laws and regulations have been complied with and all legal matters in connection with the issuance and delivery of the Shares have been approved by counsel of the Company.

        14.Disposition of Securities.    By accepting the Award, you acknowledge that you have read and understand the Company's policy, and are aware of and understand your obligations under federal securities laws in respect of trading in the Company's securities. The Company will have the right to recover, or receive reimbursement for, any compensation or profit realized on the disposition of Shares received for Restricted Units to the extent that the Company has a right of recovery or reimbursement under applicable securities laws.

        15.Plan Terms Govern.    The redemption of Restricted Units, the disposition of any Shares received for Restricted Units, and the treatment of any gain on the disposition of these Shares are subject to the terms of the Plan and any rules that the Committee may prescribe. The Plan document, as may be amended from time to time, is incorporated into these Terms and Conditions. Capitalized terms used in these Terms and Conditions have the meaning set forth in the Plan, unless otherwise stated in these Terms and Conditions. In the event of any conflict between the terms of the Plan and the terms of these Terms and Conditions, the Plan will control. By accepting the Award, you acknowledge receipt of the Plan and the prospectus, as in effect on the date of these Terms and Conditions.

2

        16.Personal Data.    To comply with applicable law and to administer the Plan and these Terms and Conditions properly, the Company and its agents may hold and process your personal data and/or sensitive personal data. Such data includes, but is not limited to, the information provided in this grant package and any changes thereto, other appropriate personal and financial data about you, and information about your participation in the Plan and Shares obtained under the Plan from time to time. By accepting the Award, you hereby give your explicit consent to the Company's processing any such personal data and/or sensitive personal data. You also hereby give your explicit consent to the Company's transfer of any such personal data and/or sensitive personal data outside the country in which you work or reside and to the United States. The legal persons for whom your personal data are intended include the Company and any of its Subsidiaries, the outside Plan administrator as selected by the Company from time to time, and any other person that the Company may find in its administration of the Plan to be appropriate. You have the right to review and correct your personal data by contacting your local Human Resources Representative. You understand that the transfer of the information outlined here is important to the administration of the Plan, and that failure to consent to the transmission of such information may limit or prohibit your participation in the Plan.

        17.No Contract of Employment or Promise of Future Grants.    By accepting the Award, you agree to be bound by the terms and conditions of these Terms and Conditions and acknowledge that the Award is granted at the sole discretion of the Company and is not considered part of any contract of employment with the Company or of your ordinary or expected salary or other compensation and will not be considered as part of such salary or compensation for purposes of any pension benefits or in the event of severance, redundancy or resignation. If your employment with the Company or a Subsidiary is terminated for any reason, whether lawfully or unlawfully, you agree that you will not be entitled by way of damages for breach of contract, dismissal or compensation for loss of office or otherwise to any sum, shares or other benefits to compensate you for the loss or diminution in value of any actual or prospective rights, benefits or expectation under or in relation to the Plan.

        18.Limitations.    Nothing in these Terms and Conditions or the Plan gives you any right to continue in the employ of the Company or any of its Subsidiaries or to interfere in any way with the right of the Company or any Subsidiary to terminate your employment at any time. Payment of your Restricted Units is not secured by a trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of this Award or the account established on your behalf. You have no rights as a stockholder of the Company pursuant to the Restricted Units until Shares are actually delivered to you.

        19.Incorporation of Other Agreements.    These Terms and Conditions and the Plan constitute the entire understanding between you and the Company regarding the Restricted Units. These Terms and Conditions supersedes any prior agreements, commitments or negotiations concerning the Restricted Units.

        20.Severability.    The invalidity or unenforceability of any provision of these Terms and Conditions will not affect the validity or enforceability of the other provisions of the Agreement, which will remain in full force and effect. Moreover, if any provision is found to be excessively broad in duration, scope or covered activity, the provision will be construed so as to be enforceable to the maximum extent compatible with applicable law.

        By accepting this Award, you agree to the following:

        (i)    you have carefully read, fully understand and agree to all of the terms and conditions described in these Terms and Conditions and the Plan; and

        (ii)   you understand and agree that these Terms and Conditions and the Plan constitute the entire understanding between you and the Company regarding the Award, and that any prior agreements, commitments or negotiations concerning the Restricted Units are replaced and superseded.

3

        You will be deemed to consent to the application of the terms and conditions set forth in these Terms and Conditions and the Plan unless you contact Tyco International Ltd., c/o Executive Compensation, 9 Roszel Road, Princeton, NJ 08540 in writing within thirty (30) days of the date of these Terms and Conditions. Notification of your non-consent will nullify this grant unless otherwise agreed to in writing by you and the Company.

Tyco International Ltd.

4

[FORM OF DIRECTOR DEFERRED STOCK UNIT AWARD LETTER]

[Date]

PERSONAL & CONFIDENTIAL

[Name]
[Address]

Dear [Name]:

        As part of the fiscal year          remuneration package for members of the Board of Directors of Tyco International Ltd. (the "Company"), you are hereby awarded           deferred stock units (the "Units") pursuant to Section 4.7 of the Tyco International Ltd. 2004 Stock and Incentive Plan (the "Plan"), a copy of which is enclosed herewith. The effective date of the grant is [Date], and the number of Units granted represents the value of $          divided by the average stock price for the 60-day period ending on [Date]. All Units are immediately vested.

        If on any date the Company shall pay any cash dividend on common shares of the Company, par value US$0.20 per common share, (the "Shares"), the number of Units credited to you shall, as of such date, be increased by an amount determined by the following formula:

W = (X multiplied by Y) divided by Z, where:

W = the number of additional Units to be credited to you on such dividend payment date;

X = the aggregate number of Units credited to you as of the record date of the dividend;

Y = the cash dividend amount; and

Z = the Fair Market Value per Share on the dividend payment date. Fair Market Value is the average of the high and low sale price.

        In the case of a dividend payable in property other than Shares or cash, the per Share value of such dividend shall be the same as applied to all other shareholders of the Company as is determined in good faith by the Board.

        In the case of a dividend paid on Shares in the form of Shares, the number of Units credited to you shall be increased by a number equal to the product of (i) the aggregate number of Units that have been credited to you through the related dividend record date, and (ii) the number of Shares (including any fraction thereof) payable as a dividend on a Share. The number and terms of the Units shall be adjusted in accordance with the provisions of the Plan.

        Upon the first to occur of (i) 30 days following termination of your service as a member of the Board of Directors of the Company (except in the event of a Cause), or (ii) a Change in Control, the Company shall issue to you a number of Shares equal to the aggregate number of vested Units credited to you on such date in full satisfaction of such Units; provided, however, that in the event that the Company is involved in a transaction in which the Shares will be exchanged for cash, the Company shall issue to you immediately prior to the consummation of such transaction a number of Shares equal to the aggregate number of vested Units credited to you on such date. Immediately after such issuance of Shares, all Units standing to your credit shall terminate immediately and be of no further force or effect. Any fractional Unit shall be rounded up to the next whole Share as no fractional Shares shall be issued.

        Termination for "Cause" occurs when an individual ceases to be a Director by reason of his or her removal by the Board for misconduct, willfully or wantonly harmful to the Company. In such event, all Units will be immediately forfeited.

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        The terms and conditions of the Plan are incorporated herein by reference and any conflict between the terms and conditions of this Letter Agreement and the Plan shall be governed by the terms and conditions of such Plan.

        Since this is a deferred stock unit award, generally, under U.S. tax rules, federal income tax (including self-employment tax for non-employee directors) will be due when the Shares are distributed. If you are subject to taxes in a jurisdiction other than the U.S., please contact your tax advisor on the tax reporting requirements.

        You cannot sell, assign, exchange, pledge or otherwise transfer the Units. If you remain an affiliate of the Company after the Shares are issued, or were an affiliate of the Company within the three month period prior to sale of the Shares, there may be various restrictions on the disposition of the Shares. If this is the case, the Company should be notified if you desire to dispose of the Shares in order to determine whether the disposition may be made without violating applicable law.

        If you have any questions about the Plan, please let me know.

        Please sign and return a copy of the attached acknowledgement letter to:

(Return FedEx packet enclosed)
Tyco International Ltd.
C/o                      
Second Floor
90 Pitts Bay Road
Pembroke HM 08

Sincerely,

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[Date]

Tyco International Ltd.
Second Floor
90 Pitts Bay Road
Pembroke HM 08
Bermuda

Attention:                        

        I, [Name], the recipient of an award of          deferred stock units, pursuant to the Tyco International Ltd. 2004 Stock and Incentive Plan (the "Plan"), hereby accept such award under the terms and conditions contained therein.

        I hereby agree to be bound by the provisions of the Plan and the Letter Agreement.

        I have been advised that if I am an affiliate of the Company, resales of any Shares received by me will be subject to the Securities Act of 1933, as amended (the "Act") and I agree that I will comply with restrictions on resales by affiliates as provided by the Act.

        In addition, by signing and returning a copy of this letter, I acknowledge receipt of the documents constituting the Plan.

Very truly yours,

[Name]

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EX-10.28

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Exhibit 10.28

TYCO INTERNATIONAL (US) INC.

SEVERANCE PLAN FOR U.S. OFFICERS AND EXECUTIVES

TABLE OF CONTENTS

			Page
ARTICLE I    BACKGROUND, PURPOSE AND TERM OF PLAN			1
	Section 1.01	Purpose of the Plan	1
	Section 1.02	Term of the Plan	1
ARTICLE II    DEFINITIONS			2
	Section 2.01	"Alternative Position"	2
	Section 2.02	"Annual Bonus"	2
	Section 2.03	"Base Salary"	2
	Section 2.04	"Board"	2
	Section 2.05	"Cause"	2
	Section 2.06	"COBRA"	2
	Section 2.07	"Code"	2
	Section 2.08	"Committee"	2
	Section 2.09	"Company"	2
	Section 2.10	"Effective Date"	2
	Section 2.11	"Eligible Employee"	2
	Section 2.12	"Employee"	2
	Section 2.13	"Employer"	3
	Section 2.14	"ERISA"	3
	Section 2.15	"Exchange Act"	3
	Section 2.16	"Involuntary Termination"	3
	Section 2.17	"Notice Pay"	3
	Section 2.18	"Officer"	3
	Section 2.19	"Participant"	3
	Section 2.20	"Permanent Disability"	3
	Section 2.21	"Plan"	3
	Section 2.22	"Plan Administrator"	3
	Section 2.23	"Release"	3
	Section 2.24	"Service"	3
	Section 2.25	"Severance Benefit"	4
	Section 2.26	"Severance Period"	4
	Section 2.27	"Subsidiary"	4
	Section 2.28	"Termination Date"	4

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	Section 2.29	"Voluntary Termination"	4
ARTICLE III    PARTICIPATION AND ELIGIBILITY FOR BENEFITS			5
	Section 3.01	Participation	5
	Section 3.02	Conditions	5
ARTICLE IV    DETERMINATION OF SEVERANCE BENEFITS			7
	Section 4.01	Amount of Severance Benefits Upon Involuntary Termination	7
	Section 4.02	Voluntary Termination; Termination for Death or Permanent Disability	8
	Section 4.03	Termination for Cause	8
	Section 4.04	Reduction of Severance Benefits	8
ARTICLE V    METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS			9
	Section 5.01	Method of Payment	9
	Section 5.02	Other Arrangements	9
	Section 5.03	Termination of Eligibility for Benefits	9
ARTICLE VI    CONFIDENTIALITY, COVENANT NOT TO COMPETE AND NOT TO SOLICIT			10
	Section 6.01	Confidential Information	10
	Section 6.02	Non-Competition	10
	Section 6.03	Non-Solicitation	10
	Section 6.04	Non-Disparagement	10
	Section 6.05	Reasonableness	11
	Section 6.06	Equitable Relief	11
	Section 6.07	Survival of Provisions	11
ARTICLE VII    THE PLAN ADMINISTRATOR			12
	Section 7.01	Authority and Duties	12
	Section 7.02	Compensation of the Plan Administrator	12
	Section 7.03	Records, Reporting and Disclosure	12
ARTICLE VIII    AMENDMENT, TERMINATION AND DURATION			13
	Section 8.01	Amendment, Suspension and Termination	13
	Section 8.02	Duration	13
ARTICLE IX    DUTIES OF THE COMPANY AND THE COMMITTEE			14
	Section 9.01	Records	14
	Section 9.02	Payment	14
	Section 9.03	Discretion	14

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ARTICLE X    CLAIMS PROCEDURES			15
	Section 10.01	Claim	15
	Section 10.02	Initial Claim	15
	Section 10.03	Appeals of Denied Administrative Claims	15
	Section 10.04	Appointment of the Named Appeals Fiduciary	16
	Section 10.05	Arbitration; Expenses	16
ARTICLE XI    MISCELLANEOUS			17
	Section 11.01	Nonalienation of Benefits	17
	Section 11.02	Notices	17
	Section 11.03	Successors	17
	Section 11.04	Other Payments	17
	Section 11.05	No Mitigation	17
	Section 11.06	No Contract of Employment	17
	Section 11.07	Severability of Provisions	17
	Section 11.08	Heirs, Assigns, and Personal Representatives	17
	Section 11.09	Headings and Captions	17
	Section 11.10	Gender and Number	17
	Section 11.11	Unfunded Plan	18
	Section 11.12	Payments to Incompetent Persons	18
	Section 11.13	Lost Payees	18
	Section 11.14	Controlling Law	18
SCHEDULE A SEVERANCE BENEFITS			A-1

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ARTICLE I

BACKGROUND, PURPOSE AND TERM OF PLAN

        Section 1.01Purpose of the Plan.    The purpose of the Plan is to provide Eligible Employees with certain compensation and benefits as set forth in the Plan in the event the Eligible Employee's employment with the Company or a Subsidiary is terminated due to an Involuntary Termination. The Plan is not intended to be an "employee pension benefit plan" or "pension plan" within the meaning of Section 3(2) of ERISA. Rather, this Plan is intended to be a "welfare benefit plan" within the meaning of Section 3(1) of ERISA and to meet the descriptive requirements of a plan constituting a "severance pay plan" within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, section 2510.3-2(b). Accordingly, the benefits paid by the Plan are not deferred compensation and no employee shall have a vested right to such benefits.

        Section 1.02Term of the Plan.    The Plan shall generally be effective as of the Effective Date and shall supersede any prior plan, program or policy under which the Company or any Subsidiary provided severance benefits prior to the Effective Date of the Plan. The Plan shall continue until terminated pursuant to Article VIII of the Plan.

ARTICLE II

DEFINITIONS

        Section 2.01"Alternative Position" shall mean a position with the Company that:

        (a)   is not more than 75 miles each way from the location of the Employee's current position (for positions that are essentially mobile, the mileage does not apply); and

        (b)   provides the Employee with pay and benefits (not including perquisites or long term incentive compensation) that are comparable in the aggregate to the Employee's current position.

        The Plan Administrator has the exclusive discretionary authority to determine whether a position is an Alternative Position.

        Section 2.02"Annual Bonus" shall mean 100% of the Participant's target annual bonus.

        Section 2.03"Base Salary" shall mean the annual base salary in effect as of the Participant's Termination Date.

        Section 2.04"Board" shall mean the Board of Directors of the Company, or any successor thereto, or a committee thereof specifically designated for purposes of making determinations hereunder.

        Section 2.05"Cause" shall mean an Employee's (i) substantial failure or refusal to perform duties and responsibilities of his or her job as required by the Company, (ii) violation of any fiduciary duty owed to the Company, (iii) conviction of a felony or misdemeanor, (iv) dishonesty, (v) theft, (vi) violation of Company rules or policy, or (vii) other egregious conduct, that has or could have a serious and detrimental impact on the Company and its employees. The Plan Administrator, in its sole and absolute discretion, shall determine Cause. Examples of "Cause" may include, but are not limited to, excessive absenteeism, misconduct, insubordination, violation of Company policy, dishonesty, and deliberate unsatisfactory performance (e.g., Employee refuses to improve deficient performance).

        Section 2.06"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

        Section 2.07"Code" shall mean the Internal Revenue Code of 1986, as amended.

        Section 2.08"Committee" shall mean the Compensation and Human Resources Committee of the Board or such other committee appointed by the Board to assist the Company in making determinations required under the Plan in accordance with its terms. The "Committee" may delegate its authority under the Plan to an individual or another committee.

        Section 2.09"Company" shall mean Tyco International Ltd. Unless it is otherwise clear from the context, Company shall generally include participating Subsidiaries.

        Section 2.10"Effective Date" shall mean January 1, 2004.

        Section 2.11"Eligible Employee" shall mean an Employee employed in the United States who is an Officer, or in career bands 1 and 2, who is not covered under any other severance plan or program sponsored by the Company or a Subsidiary. If there is any question as to whether an Employee is deemed an Eligible Employee for purposes of the Plan, the Senior Vice President—Human Resources, Tyco International Ltd. shall make the determination.

        Section 2.12"Employee" shall mean an individual employed by Tyco International Ltd. or a Subsidiary as a common law employee on the United States payroll of Tyco International Ltd. or a Subsidiary, and shall not include any person working for the Company through a temporary service or

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on a leased basis or who is hired by the Company as an independent contractor, consultant, or otherwise as a person who is not an employee for purposes of withholding federal employment taxes, as evidenced by payroll records or a written agreement with the individual, regardless of any contrary governmental or judicial determination or holding relating to such status or tax withholding.

        Section 2.13"Employer" shall mean the Company or any Subsidiary with respect to which this Plan has been adopted.

        Section 2.14"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder.

        Section 2.15"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

        Section 2.16"Involuntary Termination" shall mean a termination of the Participant initiated by the Company or a Subsidiary for any reason other than Cause, Permanent Disability or death, as provided under and subject to the conditions of Article III.

        Section 2.17"Notice Pay" shall mean the amounts that a Participant is eligible to receive pursuant to Article IV of the Plan.

        Section 2.18"Officer" shall mean any individual who is an officer, as such term is defined pursuant to Rule 16a-1(f) as promulgated under the Exchange Act, of the Company. For purposes of this definition, Officer shall also mean any officer of any of the Company's Subsidiaries who perform policy making functions, within the context of Rule 16a-1(f).

        Section 2.19"Participant" shall mean any Eligible Employee who meets the requirements of Article III and thereby becomes eligible for salary continuation and other benefits under the Plan.

        Section 2.20"Permanent Disability" shall mean that an Employee has a permanent and total incapacity from engaging in any employment for the Employer for physical or mental reasons. A "Permanent Disability" shall be deemed to exist if the Employee meets the requirements for disability benefits under the Employer's long-term disability plan or under the requirements for disability benefits under the Social Security law (or similar law outside the United States, if the Employee is employed in that jurisdiction) then in effect, or if the Employee is designated with an inactive employment status at the end of a disability or medical leave.

        Section 2.21"Plan" means the Tyco International (US) Inc. Severance Plan for U.S. Officers and Executives as set forth herein, and as the same may from time to time be amended.

        Section 2.22"Plan Administrator" shall mean the individual(s) appointed by the Committee to administer the terms of the Plan as set forth herein and if no individual is appointed by the Committee to serve as the Plan Administrator for the Plan, the Plan Administrator shall be the Senior Vice President—Human Resources, Tyco International Ltd. (or the equivalent). Notwithstanding the preceding sentence, in the event the Plan Administrator is entitled to Severance Benefits under the Plan, the Committee or its delegate shall act as the Plan Administrator for purposes of administering the terms of the Plan with respect to the Plan Administrator. The Plan Administrator may delegate all or any portion of its authority under the Plan to any other person(s).

        Section 2.23"Release" shall mean the Separation of Employment Agreement and General Release, as provided by the Company.

        Section 2.24"Service" shall mean the total number of years and completed months the Participant was an Employee of the Company. Service with any predecessor employer or with a Subsidiary prior to the Subsidiary's becoming part of the Company shall be recognized only to the extent specified in the merger or acquisition documentation relating to the Subsidiary. Periods of

3

authorized leave of absence, such as military leave, will be included in Service only to the extent required by applicable law. Any period of employment with the Company, a Subsidiary, or a predecessor employer for which an Eligible Employee previously received severance benefits, shall be excluded from Service.

        Section 2.25"Severance Benefit" shall mean the salary continuation amounts and other benefits that a Participant is eligible to receive pursuant to Article IV of the Plan.

        Section 2.26"Severance Period" shall mean the period during which a Participant is receiving Severance Benefits under this Plan.

        Section 2.27"Subsidiary" shall mean (i) a subsidiary company (wherever incorporated) as defined by section 86 of the Companies Act 1981 of Bermuda (as amended), (ii) any separately organized business unit, whether or not incorporated, of the Company, and (iii) any employer that is required to be aggregated with the Company pursuant to section 414 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder.

        Section 2.28"Termination Date" shall mean the date on which the active employment of the Participant by the Company or a Subsidiary is severed by reason of an Involuntary Termination.

        Section 2.29"Voluntary Termination" shall mean any retirement or termination of employment that is not initiated by the Company or any Subsidiary.

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ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

        Section 3.01Participation.    Each Eligible Employee in the Plan who incurs an Involuntary Termination and who satisfies the conditions of Section 3.02 shall be eligible to receive the Severance Benefits described in the Plan. An Eligible Employee shall not be eligible to receive any other severance benefits from the Company or Subsidiary on account of an Involuntary Termination, unless otherwise provided in the Plan. In addition, any Eligible Employee who is a party to an employment agreement with the Company pursuant to which such Eligible Employee is entitled to severance benefits shall be ineligible to participate in the Plan.

        Section 3.02Conditions.

        (a)   Eligibility for any Severance Benefits is expressly conditioned on (i) execution by the Participant of a Release in the form provided by the Company; (ii) compliance by the Participant with all the terms and conditions of such Release; (iii) the Participant's written agreement to the confidentiality, non-solicitation, and non-disparagement provisions in Article VI during and after the Participant's employment with the Company; and (iv) execution of a written agreement that authorizes the deduction of amounts owed to the Company prior to the payment of any Severance Benefit (or in accordance with any other schedule as the Committee may, in its sole discretion, determine to be appropriate). If the Committee determines, in its sole discretion, that the Participant has not fully complied with any of the terms of the Agreement and/or Release, the Committee may deny Severance Benefits not yet in pay status or discontinue the payment of the Participant's Severance Benefit and may require the Participant, by providing written notice of such repayment obligation to the Participant, to repay any portion of the Severance Benefit already received under the Plan. If the Committee notifies a Participant that repayment of all or any portion of the Severance Benefit received under the Plan is required, such amounts shall be repaid within thirty (30) calendar days of the date the written notice is sent. Any remedy under this subsection (a) shall be in addition to, and not in place of, any other remedy, including injunctive relief, that the Company may have.

        (b)   An Eligible Employee will not be eligible to receive severance benefits under any of the following circumstances:

        (i)    The Eligible Employee voluntarily terminates employment:

        (ii)   The Eligible Employee resigns employment before the job-end date specified by the Employer or while the Employer still desires the Eligible Employee's services;

        (iii)  The Eligible Employee's employment is terminated for Cause;

        (iv)  The Eligible Employee voluntarily retires;

        (v)   The Eligible Employee's employment is terminated due to the Eligible Employee's death or Permanent Disability;

        (vi)  The Eligible Employee does not return to work within six (6) months of the onset of an approved leave of absence, other than a personal, educational or military leave and/or as otherwise required by applicable statute;

        (vii) The Eligible Employee does not return to work within three (3) months of the onset of a personal or educational leave of absence;

        (viii) The Eligible Employee continues in employment with the Company or a Subsidiary or has the opportunity to continue in employment in the same or in an Alternative Position with the Company or a Subsidiary; or

5

        (ix)  The Eligible Employee's employment with the Employer terminates as a result of a sale of stock or assets of the Employer, merger, consolidation, joint venture or a sale or outsourcing of a business unit or function, or other transaction, and the Eligible Employee accepts employment, or has the opportunity to continue employment in an Alternative Position, with the purchaser, joint venture, or other acquiring or outsourcing entity, or a related entity of either the Company or the acquiring entity. The payment of Severance Benefits in the circumstances described in this subsection (ix) would result in a windfall to the Eligible Employee, which is not the intention of the Plan.

        (c)   The Plan Administrator has the sole discretion to determine an Eligible Employee's eligibility to receive Severance Benefits.

        (d)   An Eligible Employee returning from approved military leave will be eligible for Severance Benefits if: (i) he/she is eligible for reemployment under the provisions of the Uniformed Services Employment and Reemployment Rights Act (USERRA); (ii) his/her pre-military leave job is eliminated; and (iii) the Employer's circumstances are changed so as to make reemployment in another position impossible or unreasonable, or re-employment would create an undue hardship for the Employer. If the Eligible Employee returning from military leave qualifies for Severance Benefits, his/her severance benefits will be calculated as if he/she had remained continuously employed from the date he/she began his/her military leave. The Eligible Employee must also satisfy any other relevant conditions for payment, including execution of a Release.

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ARTICLE IV

DETERMINATION OF SEVERANCE BENEFITS

        Section 4.01Amount of Severance Benefits Upon Involuntary Termination.    The Severance Benefits to be provided to an Eligible Employee who incurs an Involuntary Termination and is determined to be eligible for Severance Benefits shall be as follows:

        (a)   Notice Pay.    Except for Officers, each Eligible Employee who meets the eligibility requirements for a Severance Benefit under Section 3.01 shall receive 30 calendar days notice as a Notice Period. In the event that the Company determines that a Participant's last day of work shall be prior to the end of his or her Notice Period, such Employee shall be entitled to pay in lieu of notice for the balance of such Notice Period. Notice Pay paid to an Eligible Employee shall be in addition to, and not offset against, the Severance Benefits the Participant may be entitled to receive under this Article IV. An Eligible Employee who does not sign, or who revokes his or her signature on, a Release shall only be eligible for Notice Pay. Unless otherwise permitted by the applicable plan documents or laws, an Eligible Employee will not be eligible to apply for short-term disability, long-term disability and/or workers' compensation during the Notice Period, or anytime thereafter.

        (b)   Salary Continuation Benefits.    Salary Continuation shall be provided during the Severance Period applicable to the Participant as set forth under the benefits schedule appended to the Plan. During the Severance Period, the Participant shall receive his or her Base Salary (net of deductions and tax withholdings, as applicable) in equal installments over the Severance Period, per normal payroll cycles. The salary continuation payment shall commence no earlier than the end of the revocation period applicable to the Release.

        (c)   Bonus.

        (i)    Participant may be eligible for a cash payment equal to his or her pro rated annual bonus for the year in which Participant's Termination Date occurs, subject to the discretion of the Company and pursuant to the terms set forth in the applicable incentive plans.

        (ii)   The Participant shall also receive a cash payment equal to his or her Annual Bonus during the Severance Period applicable to the Participant as set forth under the benefits schedule appended to the Plan. Such bonus payment shall be paid to the Participant in equal installments over the Severance Period (e.g., 12 month, 18 months or 24 months) or, in the sole discretion of the Plan Administrator, may be paid to the Participant in a single lump sum in lieu of payment over the Severance Period. The bonus payment shall be paid at the same time as the Salary Continuation Benefits.

        (d)   Medical, Dental and Health Care Reimbursement Account Benefits.    The Participant shall continue to be eligible to participate in the medical, dental and Health Care Reimbursement Account coverage in effect at the date of his or her termination (or generally comparable coverage) for himself or herself and, where applicable, his or her spouse and dependents, as the same may be changed from time to time for employees of the Company generally, as if Participant had continued in employment during the Severance Period (the "COBRA Continuation Coverage Period"). The Participant shall be responsible for the payment of the employee portion of the medical, dental and Health Care Reimbursement Account contributions that are required during the Severance Period and such contributions shall be made within the time period and in the amounts that other employees are required to pay to the Company for similar coverage. The Participant's failure to pay the applicable contributions shall result in the cessation of the applicable medical and dental coverage for the Participant and his or her spouse or domestic partner and dependents. Notwithstanding any other provision of this Plan to the contrary, in the event that a Participant commences employment with another company at any time during the

7

Severance Period, the Participant may cease receiving coverage under the Company's medical and dental plans. Within thirty (30) days of Participant's commencement of employment with another company, Participant shall provide the Company written notice of such employment and provide information to the Company regarding the medical and dental benefits provided to Participant by his or her new employer. The COBRA Continuation Coverage Period under section 4980B of the Code shall run concurrently with the Severance Period.

        (e)   Stock Options.    All stock options held by the Participant as of his or her Termination Date shall continue to vest as scheduled during the twelve (12) month period after Participant's Termination Date, unless the Participant's option agreement covering such options provides for more favorable vesting treatment. All vested outstanding stock options held by Participant shall be exercisable for the greater of (i) the period set forth in Participant's option agreement covering such options, or (ii) twelve (12) months from the Termination Date. In no event, however, shall an option be exercisable beyond its original term.

        (f)    Restricted Stock.

        (i)    Restricted Stock.    All unvested restricted stock and restricted stock units held by the Participant as of his or her Termination Date shall be forfeited as of the Termination Date.

        (g)   Outplacement Services.    The Company may, in its sole and absolute discretion, pay the cost of outplacement services for the Participant at the outplacement agency that the Company regularly uses for such purpose; provided, however, that the period of outplacement shall not exceed twelve (12) months from Participant's Termination Date. The Company shall pay the cost of outplacement services for the Participant for a period of up to twelve (12) months from Participant's Termination Date at either (i) the outplacement agency that the Company regularly uses for such purpose, or (ii) provided the Senior Vice President—Human Resources provides prior approval, at an outplacement agency selected by the Participant.

        (h)   In the event that provision of any of the benefits in (d) above, would adversely affect the tax status of the applicable plan or benefits, the Company, in its sole discretion, may elect to pay to the Participant cash in lieu of such coverage in an amount equal to the Company's premium or average cost of providing such coverage.

        Section 4.02Voluntary Termination; Termination for Death or Permanent Disability.    If the Eligible Employee's employment terminates on account of (i) the Eligible Employee's Voluntary Resignation, (ii) death, or (iii) Permanent Disability, then the Eligible Employee shall not be entitled to receive Severance Benefits under this Plan and shall be entitled only to those benefits (if any) as may be available under the Company's then-existing benefit plans and policies at the time of such termination.

        Section 4.03Termination for Cause.    If any Eligible Employee's employment terminates on account of termination by the Company for Cause, the Eligible Employee shall not be entitled to receive Severance Benefits under this Plan and shall be entitled only to those benefits that are legally required to be provided to the Eligible Employee. Notwithstanding any other provision of the Plan to the contrary, if the Committee or the Plan Administrator determines that an Eligible Employee has engaged in conduct that constitutes Cause at any time prior to the Eligible Employee's Termination Date, any Severance Benefit payable to the Eligible Employee under Section 4.01 of the Plan shall immediately cease, and the Eligible Employee shall be required to return any Severance Benefits paid to the Eligible Employee prior to such determination. The Company may withhold paying Severance Benefits under the Plan pending resolution of an inquiry that could lead to a finding resulting in Cause. If the Company has offset other payments owed to the Eligible Employee under any other plan or program, it may, in its sole discretion, waive its repayment right solely with respect to the amount of the offset so credited.

        Section 4.04Reduction of Severance Benefits.    The Plan Administrator reserves the right to make deductions in accordance with applicable law for any monies owed to the Company by the Participant or the value of Company property that the Participant has retained in his/her possession.

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ARTICLE V

METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS

        Section 5.01Method of Payment.    The Severance Benefit to which a Participant is entitled, as determined pursuant to Section 4.01, shall be paid in accordance with normal payroll practices over the Severance Period or from a supplemental unemployment benefits trust. In no event will interest be credited on the unpaid balance for which a Participant may become eligible. Payment shall be made by mailing to the last address provided by the Participant to the Company or such other reasonable method as determined by the Plan Administrator. In general, the initial payments shall be made as promptly as practicable after the Participant's Termination Date, the execution of the Release required under Section 3.02, and the expiration of the required revocation period specified in the Release. All payments of Severance Benefits are subject to applicable federal, state and local taxes and withholdings. In the event of the Participant's death prior to the completion of all payments being made, the remaining payments shall be paid to the Participant's estate.

        Section 5.02Other Arrangements.    The Severance Benefits under this Plan are not additive or cumulative to severance or termination benefits that a Participant might also be entitled to receive under the terms of a written employment agreement, a severance agreement or any other arrangement with the Employer. As a condition of participating in the Plan, the Eligible Employee must expressly agree that this Plan supersedes all prior agreements, and sets forth the entire Severance Benefit the Eligible Employee is entitled to while an Eligible Employee in the Plan. The provisions of this Plan may provide for payments to the Eligible Employee under certain compensation or bonus plans under circumstances where such plans would not provide for payment thereof. It is the specific intention of the Company that the provisions of this Plan shall supersede any provisions to the contrary in such plans, to the extent permitted by applicable law, and such plans shall be deemed to be have been amended to correspond with this Plan without further action by the Company or the Board.

        Section 5.03Termination of Eligibility for Benefits.

        (a)   All Eligible Employees shall cease to be eligible to participate in the Plan, and all Severance Benefit payments shall cease upon the occurrence of the earlier of:

        (i)    Subject to Article VIII, termination or modification of the Plan; or

        (ii)   Completion of payment to the Participant of the Severance Benefit for which the Participant is eligible under Article IV.

        (b)   Notwithstanding anything herein to the contrary, the Company shall have the right to cease all Severance Benefit payments and to recover payments previously made to the Participant should the Participant at any time breach the Participant's undertakings under the terms of the Plan, the Release the Participant executed to obtain the Severance Benefits under the Plan or the confidentiality, non-competition, non-solicitation and non-disparagement provisions of Article VI.

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ARTICLE VI

CONFIDENTIALITY, COVENANT NOT TO COMPETE AND NOT TO SOLICIT

        Section 6.01Confidential Information.    The Eligible Employee agrees that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Eligible Employee's assigned duties and for the benefit of the Company, either during the period of the Eligible Employee's employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its Subsidiaries, affiliated companies or businesses, which shall have been obtained by the Eligible Employee during the Eligible Employee's employment by the Company or a Subsidiary. The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to the Eligible Employee; (ii) becomes known to the public subsequent to disclosure to the Eligible Employee through no wrongful act of the Eligible Employee or any representative of the Eligible Employee; or (iii) the Eligible Employee is required to disclose by applicable law, regulation or legal process (provided that the Eligible Employee provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information). Notwithstanding clauses (i) and (ii) of the preceding sentence, the Eligible Employee's obligation to maintain such disclosed information in confidence shall not terminate where only portions of the information are in the public domain.

        Section 6.02Non-Competition.    The Participant acknowledges that he or she performs services of a unique nature for the Company that are irreplaceable, and that his or her performance of such services for a competing business will result in irreparable harm to the Company. Accordingly, during the Participant's employment with the Company or Subsidiary and for the one (1) year period thereafter, the Participant agrees that the Participant will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, engaged in any business of the same type as any business in which the Company or any of its Subsidiaries or affiliates is engaged on the date of termination or in which they have proposed, on or prior to such date, to be engaged in on or after such date and in which the Participant has been involved to any extent (other than de minimis) at any time during the one (1) year period ending with the date of termination, in any locale of any country in which the Company or any of its Subsidiaries conducts business. This Section 6.02 shall not prevent the Participant from owning not more than one percent of the total shares of all classes of stock outstanding of any publicly held entity engaged in such business, nor will it restrict the Participant from rendering services to charitable organizations, as such term is defined in section 501(c) of the Code.

        Section 6.03Non-Solicitation.    During the Eligible Employee's employment with the Company or a Subsidiary and for the two (2) year period thereafter, the Eligible Employee agrees that he or she will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i) any employee of the Company or any Subsidiary, as defined by the Company, to leave such employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee, or (ii) any customer of the Company or any Subsidiary to purchase goods or services then sold by the Company or any Subsidiary from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer.

        Section 6.04Non-Disparagement.    Each of the Eligible Employee and the Company (for purposes hereof, the Company shall mean only the executive officers and directors thereof and not any other employees) agrees not to make any statements that disparage the other party, or in the case of the

10

Company or its Subsidiaries, their respective affiliates, employees, officers, directors, products or services. Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 6.04.

        Section 6.05Reasonableness.    In the event the provisions of this Article VI shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws.

        Section 6.06Equitable Relief.

        (a)   By participating in the Plan, the Eligible Employee acknowledges that the restrictions contained in this Article VI are reasonable and necessary to protect the legitimate interests of the Company, its Subsidiaries and its affiliates, that the Company would not have established this Plan in the absence of such restrictions, and that any violation of any provision of this Article will result in irreparable injury to the Company. By agreeing to participate in the Plan, the Eligible Employee represents that his or her experience and capabilities are such that the restrictions contained in this Article VI will not prevent the Eligible Employee from obtaining employment or otherwise earning a living at the same general level of economic benefit as is currently the case. The Eligible Employee further represents and acknowledges that (i) he or she has been advised by the Company to consult his or her own legal counsel in respect of this Plan, and (ii) that he or she has had full opportunity, prior to agreeing to participate in this Plan, to review thoroughly this Plan with his or her counsel.

        (b)   The Eligible Employee agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Article VI, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. In the event that any of the provisions of this Article VI should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service, or other limitations permitted by applicable law.

        (c)   The Eligible Employee irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this Article VI, including without limitation, any action commenced by the Company for preliminary and permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the District of New York, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in New York, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Participant may have to the laying of venue of any such suit, action or proceeding in any such court. Participant also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 11.02.

        Section 6.07Survival of Provisions.    The obligations contained in this Article VI shall survive the termination of Eligible Employee's employment with the Company or a Subsidiary and shall be fully enforceable thereafter.

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ARTICLE VII

THE PLAN ADMINISTRATOR

        Section 7.01Authority and Duties.    It shall be the duty of the Plan Administrator, on the basis of information supplied to it by the Company and the Committee, to properly administer the Plan. The Plan Administrator shall have the full power, authority and discretion to construe, interpret and administer the Plan, to make factual determinations, to correct deficiencies therein, and to supply omissions. All decisions, actions and interpretations of the Plan Administrator shall be final, binding and conclusive upon the parties, subject only to determinations by the Named Appeals Fiduciary (as defined in Section 10.04), with respect to denied claims for Severance Benefits. The Plan Administrator may adopt such rules and regulations and may make such decisions as it deems necessary or desirable for the proper administration of the Plan.

        Section 7.02Compensation of the Plan Administrator.    The Plan Administrator shall receive no compensation for services as such. However, all reasonable expenses of the Plan Administrator shall be paid or reimbursed by the Company upon proper documentation. The Plan Administrator shall be indemnified by the Company against personal liability for actions taken in good faith in the discharge of the Plan Administrator's duties.

        Section 7.03Records, Reporting and Disclosure.    The Plan Administrator shall keep a copy of all records relating to the payment of Severance Benefits to Participants and former Participants and all other records necessary for the proper operation of the Plan. All Plan records shall be made available to the Committee, the Company and to each Participant for examination during business hours except that a Participant shall examine only such records as pertain exclusively to the examining Participant and to the Plan. The Plan Administrator shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA, the Code, and every other relevant statute, each as amended, and all regulations thereunder (except that the Company, as payor of the Severance Benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes, and other amounts that may be similarly reportable).

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ARTICLE VIII

AMENDMENT, TERMINATION AND DURATION

        Section 8.01Amendment, Suspension and Termination.    Except as otherwise provided in this Section 8.01, the Board or its delegee shall have the right, at any time and from time to time, to amend, suspend or terminate the Plan in whole or in part, for any reason or without reason, and without either the consent of or the prior notification to any Participant, by a formal written action. No such amendment shall give the Company the right to recover any amount paid to a Participant prior to the date of such amendment or to cause the cessation of Severance Benefits already approved for a Participant who has executed a Release as required under Section 3.02.

        Section 8.02Duration.    Unless terminated sooner by the Board or its delegee, the Plan shall continue in full force and effect until termination of the Plan pursuant to Section 8.01; provided, however, that after the termination of the Plan, if any Participants terminated employment on account of an Involuntary Termination prior to the termination of the Plan and are still receiving Severance Benefits under the Plan, the Plan shall remain in effect until all of the obligations of the Company are satisfied with respect to such Participants.

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ARTICLE IX

DUTIES OF THE COMPANY AND THE COMMITTEE

        Section 9.01Records.    The Company or a Subsidiary thereof shall supply to the Committee all records and information necessary to the performance of the Committee's duties.

        Section 9.02Payment.    Payments of Severance Benefits to Participants shall be made in such amount as determined by the Committee under Article IV, from the Company's general assets or from a supplemental unemployment benefits trust, in accordance with the terms of the Plan, as directed by the Committee.

        Section 9.03Discretion.    Any decisions, actions or interpretations to be made under the Plan by the Board, the Committee and the Plan Administrator, acting on behalf of either, shall be made in each of their respective sole discretion, not in any fiduciary capacity and need not be uniformly applied to similarly situated individuals and such decisions, actions or interpretations shall be final, binding and conclusive upon all parties. As a condition of participating in the Plan, the Eligible Employee acknowledges that all decisions and determinations of the Board, the Committee and the Plan Administrator shall be final and binding on the Eligible Employee, his or her beneficiaries and any other person having or claiming an interest under the Plan on his or her behalf.

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ARTICLE X

CLAIMS PROCEDURES

        Section 10.01Claim.    Each Participant under this Plan may contest only the administration of the Severance Benefits awarded by completing and filing with the Plan Administrator a written request for review in the manner specified by the Plan Administrator. No appeal is permissible as to a Participant's eligibility for or amount of the Severance Benefit, which are decisions made solely within the discretion of the Company, and the Committee acting on behalf of the Company. No person may bring an action for any alleged wrongful denial of Plan benefits in a court of law unless the claims procedures described in this Article X are exhausted and a final determination is made by the Plan Administrator and/or the Named Appeals Fiduciary. If the terminated Participant or interested person challenges a decision by the Plan Administrator and/or Named Appeals Fiduciary, a review by the court of law will be limited to the facts, evidence and issues presented to the Plan Administrator during the claims procedure set forth in this Article X. Facts and evidence that become known to the terminated Participant or other interested person after having exhausted the claims procedure must be brought to the attention of the Plan Administrator for reconsideration of the claims administrator. Issues not raised with the Plan Administrator and/or Named Appeals Fiduciary will be deemed waived.

        Section 10.02Initial Claim.    Before the date on which payment of a Severance Benefit commences, each such application must be supported by such information as the Plan Administrator deems relevant and appropriate. In the event that any claim relating to the administration of Severance Benefits is denied in whole or in part, the terminated Participant or his or her beneficiary ("claimant") whose claim has been so denied shall be notified of such denial in writing by the Plan Administrator within ninety (90) days after the receipt of the claim for benefits. This period may be extended an additional ninety (90) days if the Plan Administrator determines such extension is necessary and the Plan Administrator provides notice of extension to the claimant prior to the end of the initial ninety (90) day period. The notice advising of the denial shall specify the following: (i) the reason or reasons for denial, (ii) make specific reference to the Plan provisions on which the determination was based, (iii) describe any additional material or information necessary for the claimant to perfect the claim (explaining why such material or information is needed), and (iv) describe the Plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on review.

        Section 10.03Appeals of Denied Administrative Claims.    All appeals shall be made by the following procedure:

        (a)   A claimant whose claim has been denied shall file with the Plan Administrator a notice of appeal of the denial. Such notice shall be filed within sixty (60) calendar days of notification by the Plan Administrator of the denial of a claim, shall be made in writing, and shall set forth all of the facts upon which the appeal is based. Appeals not timely filed shall be barred.

        (b)   The Named Appeals Fiduciary shall consider the merits of the claimant's written presentations, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Named Appeals Fiduciary shall deem relevant.

        (c)   The Named Appeals Fiduciary shall render a determination upon the appealed claim which determination shall be accompanied by a written statement as to the reasons therefor. The determination shall be made to the claimant within sixty (60) days of the claimant's request for review, unless the Names Appeals Fiduciary determines that special circumstances require an extension of time for processing the claim. In such case, the Named Appeals Fiduciary shall notify the claimant of the need for an extension of time to render its decision prior to the end of the initial sixty (60) day period, and the Named Appeals Fiduciary shall have an additional sixty (60) day period to make its determination. The determination so rendered shall be binding upon

15

all parties. If the determination is adverse to the claimant, the notice shall provide (i) the reason or reasons for denial, (ii) make specific reference to the Plan provisions on which the determination was based, (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to a the claimant's claim for benefits, and (iv) state that the claimant has the right to bring an action under section 502(a) of ERISA.

        Section 10.04Appointment of the Named Appeals Fiduciary.    The Named Appeals Fiduciary shall be the person or persons named as such by the Board or Committee, or, if no such person or persons be named, then the person or persons named by the Plan Administrator as the Named Appeals Fiduciary. Named Appeals Fiduciaries may at any time be removed by the Board or Committee, and any Named Appeals Fiduciary named by the Plan Administrator may be removed by the Plan Administrator. All such removals may be with or without cause and shall be effective on the date stated in the notice of removal. The Named Appeals Fiduciary shall be a "Named Fiduciary" within the meaning of ERISA, and unless appointed to other fiduciary responsibilities, shall have no authority, responsibility, or liability with respect to any matter other than the proper discharge of the functions of the Named Appeals Fiduciary as set forth herein.

        Section 10.05Arbitration; Expenses.    In the event of any dispute under the provisions of this Plan, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall have the dispute, controversy or claim settled by arbitration in New York, New York (or such other location as may be mutually agreed upon by the Employer and the Participant) in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Participant, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Plan or to award a remedy for a dispute involving this Plan other than a benefit specifically provided under or by virtue of the Plan. If the Participant substantially prevails on any material issue, which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration (including the Company's and Participant's reasonable attorneys' fees and expenses). Otherwise, each party shall be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys' fees and expenses) and shall share the fees of the American Arbitration Association.

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ARTICLE XI

MISCELLANEOUS

        Section 11.01Nonalienation of Benefits.    None of the payments, benefits or rights of any Participant shall be subject to any claim of any creditor of any Participant, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment (if permitted under applicable law), trustee's process, or any other legal or equitable process available to any creditor of such Participant. No Participant shall have the right to alienate, anticipate, commute, plead, encumber or assign any of the benefits or payments that he may expect to receive, continently or otherwise, under this Plan, except for the designation of a beneficiary as set forth in Section 5.01.

        Section 11.02Notices.    All notices and other communications required hereunder shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service. In the case of the Participant, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to the Plan Administrator.

        Section 11.03Successors.    Any successor to the Company shall assume the obligations under this Plan and expressly agree to perform the obligations under this Plan.

        Section 11.04Other Payments.    Except as otherwise provided in this Plan, no Participant shall be entitled to any cash payments or other severance benefits under any of the Company's then current severance pay policies for a termination that is covered by this Plan for the Participant.

        Section 11.05No Mitigation.    Except as otherwise provided in Section 4.01(d) and Section 4.04, Participant shall not be required to mitigate the amount of any Severance Benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of any Severance Benefit provided for herein be reduced by any compensation earned by other employment or otherwise, except if the Participant is re-employed by Company, in which case Severance Benefits shall cease.

        Section 11.06No Contract of Employment.    Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Eligible Employee or any person whosoever, the right to be retained in the service of the Company, and all Eligible Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.

        Section 11.07    Severability of Provisions.    If any provision of this Plan shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

        Section 11.08    Heirs, Assigns, and Personal Representatives.    This Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Participant, present and future.

        Section 11.09    Headings and Captions.    The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

        Section 11.10    Gender and Number.    Where the context admits: words in any gender shall include any other gender, and, except where otherwise clearly indicated by context, the singular shall include the plural, and vice-versa.

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        Section 11.11    Unfunded Plan.    The Plan shall not be funded. No Participant shall have any right to, or interest in, any assets of the Company that may be applied by the Company to the payment of Severance Benefits.

        Section 11.12    Payments to Incompetent Persons.    Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Committee and all other parties with respect thereto.

        Section 11.13    Lost Payees.    A benefit shall be deemed forfeited if the Committee is unable to locate a Participant to whom a Severance Benefit is due. Such Severance Benefit shall be reinstated if application is made by the Participant for the forfeited Severance Benefit while this Plan is in operation.

        Section 11.14    Controlling Law.    This Plan shall be construed and enforced according to the laws of the State of New York to the extent not superseded by Federal law.

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SCHEDULE A

SEVERANCE BENEFITS

Section 16 Officers	24 months of pay
Presidents of businesses whose annual revenue is $2 billion or more	18 months of pay
All other Band 1 and 2 employees	12 months of pay.

Notwithstanding the foregoing, for Participants whose benefit is provided pursuant to a supplemental unemployment benefits trust—cash Severance Benefits shall be paid for the period of time set forth under the plan, with the trust being the exclusive source of all salary continuation other than Notice Pay.

A-1

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TABLE OF CONTENTS
ARTICLE I BACKGROUND, PURPOSE AND TERM OF PLAN
ARTICLE II DEFINITIONS
ARTICLE III PARTICIPATION AND ELIGIBILITY FOR BENEFITS
ARTICLE IV DETERMINATION OF SEVERANCE BENEFITS
ARTICLE V METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS
ARTICLE VI CONFIDENTIALITY, COVENANT NOT TO COMPETE AND NOT TO SOLICIT
ARTICLE VII THE PLAN ADMINISTRATOR
ARTICLE VIII AMENDMENT, TERMINATION AND DURATION
ARTICLE IX DUTIES OF THE COMPANY AND THE COMMITTEE
ARTICLE X CLAIMS PROCEDURES
ARTICLE XI MISCELLANEOUS
SCHEDULE A SEVERANCE BENEFITS

EX-10.31

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Exhibit 10.31

AMENDMENT TO RETENTION AGREEMENT

        This AMENDMENT TO RETENTION AGREEMENT (this "Amendment") is entered into as of the 9^th day of December, 2004, by and between Tyco International Ltd. (the "Parent") and Richard J. Meelia (the "Executive").

W I T N E S S E T H

        WHEREAS, Parent and Executive entered into a Retention Agreement effective as of February 14, 2002 (the "Retention Agreement") to encourage Executive to remain in the employ of Parent and to ensure the continued availability of his advice and counsel, and to assure that he would not provide services for competing business in accordance with the terms thereof; and

        WHEREAS, the Retention Agreement provides for certain benefits to Executive in the event that his employment with Parent is terminated, including certain benefits if his employment is terminated for any reason other than for Cause at any time subsequent to February 28, 2005 and prior to June 1, 2005; and

        WHEREAS, Parent considers it essential to the best interests of the shareholders and Parent to ensure Executive's continued employment with Parent through December 31, 2005, to assist with succession planning; and

        WHEREAS, Executive recognizes the importance of the confidentiality, non-solicitation, noncompetition and other covenants in the Retention Agreement, and acknowledges that he would be subject to these covenants following December 31, 2005, as indicated in the Retention Agreement; and

        WHEREAS, Parent and Executive have agreed to amend the Retention Agreement to extend the June 1, 2005 date referenced above to December 31, 2005.

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Parent and Executive hereby agree as follows:

        1.     Section 4(g) of the Retention Agreement is hereby amended by deleting the date "June 1, 2005" in the first sentence thereof and replacing it with "December 31, 2005".

        2.     Executive acknowledges and agrees that, as set forth in the provisions of Section 4(g) of the Retention Agreement, the receipt of all items enumerated in clauses (i), (ii) and (iii) thereof is conditioned upon his compliance with the covenants set forth in Sections 7, 8, 9 and 11 of the Retention Agreement.

        3.     Except as specifically modified in Section 1 above, the terms of the Retention Agreement shall remain in full force and effect.

        IN WITNESS WHEREOF, the Parent and the Executive have caused this Amendment to be executed as of the date first above written.

TYCO INTERNATIONAL LTD.
By:	/s/  EDWARD D. BREEN
Name:	Edward D. Breen
Title:	Chairman and Chief Executive Officer
EXECUTIVE:
/s/  RICHARD J. MEELIA Richard J. Meelia

2

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AMENDMENT TO RETENTION AGREEMENT

EX-21.1

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Exhibit 21.1

Tyco International, Ltd.
Subsidiaries at September 30, 2004

Argentina

ADT Security Services S.A. (Argentina)

Elo Touch Systems Argentina S.A.

Fayser S.R.L.

Inproteco SA

Maulo S.A.

Sensormatic Argentina S.A.

Tyco Electronics Argentina S.A.

Tyco Flow Control Argentina S.A.

Tyco Networks (Argentina) S.R.L.

Tyco Services S.A.

Tyco Submarine Systems de Argentina S.A.

Australia

ACN 000 233 536 Pty Limited

ACN 000 343 019 Pty Limited

ACN 069 907 384 Pty Limited

ADT Wireless Pty Limited

Ancon CCL Pty Limited

Auto Suture Holdings Pty Limited

Banool Investments (VIC) Pty Ltd.

Bonvilla Holdings Pty Ltd

CCL Talaust Pty Limited

Clarebury Pty Ltd

Coastline Foundry (Qld) Pty Limited

Complete Engineering Group Pty Limited

Critchley Electrical Products Pty Limited

Danby Pty Limited

Dulmison Australia Pty Ltd

Dulmison Pty Ltd

ETE Coliban Pty Limited

Earth Tech Engineering (Queensland) Pty Limited

Earth Tech Engineering Pty Limited

Egan Bros. Building Services Pty Limited

Electrostrut Australia Pty Limited

Fire Control Pty Limited

Firepipe Protection Pty Limited

Firmagroup Operations Holdings Pty Limited

Fuelquip Pty Limited

Gold Energy (Aust) Pty Limited

Goyen Controls Co Pty Limited

Grangehurst Enterprises Pty Ltd.

Greenspan Environmental Technology Pty Ltd

Greenspan Technology Pty Ltd

Haden F M Pty Limited

Haden Staff Superannuation Fund Pty Limited

Kalanda Enterprises Pty Ltd

Keystone Asia Pacific Pty Limited

Lafayette Pharmaceuticals Pty Limited

M.B. John Pty Limited

M/A Com Private Radio Systems Pty Limited

MFS Holdings Pty Limited

Mallinckrodt Australia Pty Limited

Management Corporation Pty Limited

Mather & Platt Pty Limited

Medefield Pty Limited

Metropolitan Fire Services Pty Limited

Microwave Associates Australia Pty Limited

Milperra Developments Pty Limited

Morlynn Ceramics Pty Ltd.

Nationguard Security Pty Limited

P A Pacific Pty Limited

Panmedica Pty Limited

Prindon Holdings Pty Limited

Reid Crowther (Australia) Pty. Limited

Rel Corp Management Services Pty Ltd

Resolve Engineering Pty Limited

Rindin Enterprises Pty Limited

Sensormatic Australia Pty Limited

Sherwood Medical Industries Pty. Limited

Simplex International Pty Limited

Steel Mains Pty Limited

Super Nominees Pty Limited

Swan Metal Skirtings Pty Limited

TISP Pty Limited

TopAq Pty Limited

Tyco Asia Pacific Pty Limited

Tyco Australia Pty Limited

Tyco Building Products Pty Limited

Tyco Electronics Networks Pty. Limited

Tyco Electronics Pty Limited

Tyco Engineering and Construction (Asia) Pty. Ltd.

Tyco Flexonics Australia Pty Limited

Tyco Flow Control Pacific Pty Limited

Tyco Healthcare Pty Limited

Tyco International Pty Limited

Tyco Lambda (Australian Branch)

Tyco Projects (Australia) Pty Limited

Tyco Services Pty Limited

Tyco Water Pty Limited

Unistrut (New Zealand) Holdings Pty Limited

Unistrut Australia Pty Limited

Unistrut New Zealand Limited

Valleylab (Australia) Pty Limited

Viking Fire Systems Pty Limited

Water Reticulation Systems (Virginia) Pty Limited

Water Reticulation Systems Hire Pty Limited

Yarway Australia Pty Limited

2

Austria

Ancon Building Products GesmbH

Feuerschutz GmbH

Feuerschutz GmbH (Austria)

IBS Feuerschutz GmbH

Sensormatic Ges.m.b.H

Total Walther Feuerschutz und Sicherheit GmbH

Tyco Building Services Products (Austria) GmbH

Tyco Electronics Austria GmbH

Tyco Healthcare Austria GmbH

Tyco Projects (Austria) GmbH

Bahamas

A&E Products Korea Ltd.

TyCom Services Inc.

TyCom Shares Ltd.

Tyco Global Exchange Inc.

Tyco International Asia Inc. (Bahamas)

Tyco Shares Ltd.

World Services Inc.

Bangladesh

Bengal Plastic Industries Ltd.

Barbados

AMP Exports Limited

Corcom International Limited

Corcom West Indies Limited

DSC Security Products International Ltd.

Earth Tech, Inc.

Exeter Holdings Limited

Graphic Controls (Barbados), Ltd.

Reid Crowther Engineering Ltd.

TSSL Foreign Sales Corporation

TyCom Holdings (Barbados) Ltd.

TyCom Networks (Barbados) Ltd.

Tyco Electronics Holdings Ltd.

Tyco International Holdings Ltd.

Tyco International Sales Corp.

Tyco Worldwide Holdings Ltd.

USSC FSC, Inc.

Belgium

ADT Europe N.V.

ADT Security Services N.V. (also known as S.A.)

Airvans Belgium S.A.

All Security Systems NV

CIPE Belgium S.A.

DSC International SA

Mallinckrodt Belgium N.V./S.A.

3

Raychem Industries NV

Sensormatic BVBA

Total Security Equipment BVBA

TyCom Contracting B.V.B.A.

Tyco Adhesives BVBA

Tyco Electronics Belgium EC N.V.

Tyco Electronics Raychem NV

Tyco Flow Control Europe S.A.

Tyco Healthcare Belgium N.V.

Tyco Integrated Systems BVBA

Tyco Networks (Belgium) B.V.B.A.

Tyco Thermal Controls NV

WHICH Belgium S.A.

Wormald S.A. (also N.V.)

Belize

Earth Tech Belize Limited

Bermuda

Camron (Bermuda) Insurance, Ltd.

Carnforth Limited

Cawich Limited

Electro-Protective Limited

Kral Steel Limited

Mallinckrodt Holdings Ireland

Mallinckrodt Medical International Holdings

Nellcor Puritan Bennett Ireland Holdings

TyCom Global Marketing Ltd.

Tyco (Bermuda) Unlimited No. 1

Tyco (Bermuda) Unlimited No. 2

Tyco (Bermuda) Unlimited No. 3

Tyco (Bermuda) Unlimited No. 4

Tyco (Bermuda) Unlimited No. 5

Tyco (Bermuda) Unlimited No. 6

Tyco (Bermuda) Unlimited No. 7

Tyco (Bermuda) Unlimited No. 8

Tyco (Bermuda) Unlimited No. 9

Tyco (Bermuda) Unlimited No. 10

Tyco Alpha Limited

Tyco Asia Networks Ltd.

Tyco Beta Limited

Tyco Cableship Charters Ltd.

Tyco Capital Holdings Ltd.

Tyco Capital Ltd.

Tyco Contracting Ltd.

Tyco Delta Limited

Tyco Epsilon Limited

Tyco Eta Limited

Tyco Gamma Limited

Tyco Global Networks Ltd.

Tyco Holdings (Bermuda) No. 4 Limited

4

Tyco Holdings (Bermuda) No. 6 Limited

Tyco Holdings (Bermuda) No. 7 Limited

Tyco Holdings (Bermuda) No. 12 Limited

Tyco Holdings (Bermuda) No. 14 Limited

Tyco Holdings (Bermuda) No. 15 Limited

Tyco Holdings (Bermuda) No. 16 Limited

Tyco Holdings (Bermuda) No. 17 Limited

Tyco Holdings (Bermuda) No. 18 Limited

Tyco Holdings (Bermuda) No. 19 Limited

Tyco Holdings (Bermuda) No. 20 Limited

Tyco Holdings Limited

Tyco Iota Limited

Tyco Kappa Limited

Tyco Lambda (Bermuda Company)

Tyco Omega Limited

Tyco Rho Limited

Tyco Sigma Limited

Tyco Telecommunications Ltd.

Tyco Zeta

Willoughby Assurance Ltd.

Brazil

A&E Products do Brasil Ltda.

ADT Security Services do Brazil Ltda

AlarmTeck do Brazil Sistemas de Vigilancia Ltda.

AlarmTek Comersio & Participacoes Ltda.

Auto Suture do Brasil Ltda.

Caenf Aguas E Esgotos de Nova Friburgo Ltd. [Brazil] (50%)

Concessionaria de Aguas E Esgotos de Nova Friburgo Ltda.

Dinaco Industria e Comercio de Ferro e Aco Ltda.

Earth Tech Brasil Ltda.

Empresa de Transmissao de Energia do Oeste Ltda

Figgie do Brasil Industria e Commercio Ltda.

Grinnell Corporation

Mallinckrodt do Brasil, Ltda.

Mojonnier do Brasil Industria e Commercio de Equipamentos Ltda.

S.E.C. do Brasil Ltda.

Saneamento de Jau Ltda. (99.9%)

Sanear Saneamento de Aracatuba S.A.

Senelbra Industria, Comercio e Servicos Ltda. (51%)

SensorBrasil Sistemas Comercio & Locacoes Ltda.

Sensormatic do Brasil Electronica Ltda. (51%)

Tyco Electro-Electronica Ltda.

Tyco Electronics Brasil S.A.

Tyco Electronics da Amazonia Ltda.

Tyco Fire & Security Equipamentos Ltda.

Tyco Flow Control do Brasil Ltda.

Tyco Networks (Brasil) Ltda.

Tyco Services Ltda.

Tyco Sistemas de Energia Ltda.

Tyco Submarine Systems Brasil Ltda.

5

Tyco Valves & Controls Brasil Ltda.

Valvulas Crosby Industria e Commercio Ltd.

Westlock Controls Equipmentos de Controle Ltda

Brunei Darussalam

Indeco Engineers (Pte) Ltd, Brunei Branch

Indeco Services Sdn Bhd

Tyco Services (B) Sdn. Bhd.

Canada

1306437 Ontario Limited

1306438 Ontario Limited

1307520 Ontario Limited

1319209 Ontario Limited

1355538 Ontario Limited

495649 Ontario Limited

9020-4702 Quebec Inc.

ADT Canada Holdings Limited

ADT Finance Inc.

ADT Security Services Canada, Inc.

Ansul Canada Limited

Becker Fire Service Ltd.

Century Industries Company

Columbia-MBF Inc.

Critchley Inc.—Canada

Cronin Fire Equipment (Edmonton) Ltd.

Earth Tech (Canada) Inc.

Hawley Group Canada Limited

Hygieia Holdings (Canada) Inc.

Icon Systems Limited

Inbrand Corporation (Canada) Inc.

John Thomas Batts Enterprises (Canada) Ltd.

KRC Consultants (50%)

Keystone Canada Co.

Lafayette Pharmaceuticals (Canada) Inc.

Ludlow Canada, Inc.

Ludlow Technical Products Canada, Ltd.

M/A-COM Private Radio Systems Canada Corp.

Mallinckrodt Canada Inc.

Minervatech Inc.

Nellcor Puritan Bennett (Melville) Ltd.

Noona and Reid Crowther Partnership (51%)

Paragon Trade Brands (Canada) Inc.

Parkwood Security Systems Inc.

Proctor & Redfern International Limited

Reid Crowther International Ltd.

Rovalve Canada Ltd.

SEC Investments of Canada Ltd.

SecurityLink, Ltd.

SecurityLink from Ameritech Ltd. (Canada)

Sensormatic Canada Incorporated

6

TEPG Canada Inc.

TTCC Holdings Inc.

Tracer Canada Incorporated

Tracer Field Services Canada Ltd.

Tracer Industries Canada Limited

Tracer Industries International, Inc.

Tracer Industries, Inc.

Tri-Ed Ltd.

TyCom Networks (Canada) Ltd.—Reseaux TyCom (Canada) Ltee.

Tyco Electronics Canada Ltd.

Tyco Healthcare Group Canada Inc.

Tyco International of Canada Ltd.

Tyco Plastics Canada Ltd.

Tyco Safety Products Canada Ltd.

Tyco Thermal Controls (Canada) Ltd

Tyco Valves & Controls Canada Inc.

Unistrut Canada Limited

Cayman Islands

Davis & Geck Caribe Limited

Davis & Geck Limited

Raychem International

ReSensormatic Cayman Finance Ltd.

Sensormatic Cayman Finance Ltd.

Sensormatic Cayman LP

Chile

ADT Securidad Fisica S.A.

ADT Security Services SA (Chile)

Comercial Kendall (Chile) Limitada

General Security S.A.

Reveco y Cia. Ltda.

Simplex S.A.

TyCom Networks (Chile) S.A.

Tyco Electronics Industrial Y Comercial Chile Limitada

Tyco Flow Control Chile S.A.

Tyco Services S.A. (Chile)

Unistrut Chile Comercial E. Industrial Limitada (60%)

China

AMP (China) Investment Co. Ltd.

AMP Products Pacific Ltd. Beijing Office

Alpha-Max Actuator Manufacturing Co. Ltd

Ansul Fire Equipment (Shanghai) Co. Ltd

Beijing Keystone Valve Co. Ltd.

Dongguan Transpower Electric Products Co., Ltd.

Dulmison Zibo Insulator Co., Ltd.

Earth Tech Management Consulting Service (Beijing) Co., Ltd.

Earth Tech, Inc. (Beijing Branch)

Guangzhou Xilang Wastewater Treatment Co. Ltd. (65%)

KTM Ball Valves Manufacturing (Sichuan) Co. Ltd

7

Keystone (Jingmen) Valve Co. Ltd.

Keystone Valve (China) Ltd.

Kitamura Valve Mfg (Dalian F.T.Z.) Co. Ltd

Mallinckrodt International Corporation

Qinhuangdao Pacific Water Company Limited (80%)

Raychem (Shanghai) Trading Ltd

Raychem Electronics (Shanghai) Ltd.

Raychem Shanghai Cable Accessories Ltd

Sensormatic Electronics (Shen Yang) Co. Ltd.

Shangdong Zibo Electrical Porcelain Co. Ltd

Shanghai Anderson Greenwood Crosby Valve Co. Ltd (60%)

Shanghai CII Electronic Co. Ltd

Shanghai Eagle Safety Equipment Ltd.

Shanghai Ouli Trading Co. Ltd.

Shenyang Yarway Valve Co. Ltd.

Shenzhen Original Electric Co Ltd

Simplex (Tianjin) Fire & Security System Co., Ltd.

Spraysafe Automatic Sprinklers, Shanghai Office

Tianjin Earth Tech Jieyuan Water Co., Ltd. (52%)

Tyco Electronics AMP Shanghai Ltd.

Tyco Electronics EM Shenzhan Co. Ltd

Tyco (Shanghai) Management Consulting Co., Ltd.

Tyco Electronics (Dongguan) Ltd

Tyco Electronics (Kunshan) Ltd

Tyco Electronics (Shanghai) Co., Ltd

Tyco Electronics (Wuxi) Ltd

Tyco Electronics (Zhuhai) Ltd

Tyco Electronics AMP Guangdong Ltd

Tyco Electronics AMP Qingdao Co. Ltd.

Tyco Electronics EM Shenzhen Co. Ltd

Tyco Fire & Security (Tianjin) Ltd

Tyco Fire & Security Services Asia Co. Ltd

Tyco Fire & Security Services International Trading (Shanghai) Co. Ltd

Tyco Flow Control Trading (Shanghai) Ltd.

Tyco Healthcare International Trading (Shanghai) Co., Ltd.

Tyco Packaging Systems (Shanghai) Co., Ltd

Tyco Thermal Controls (Huzhou) Co. Ltd

Colombia

Comercializadora de Equipos Antihurto Sensorcol S.A. (98.8%)

Mercantil de Importaciones y Exportaciones Ltda. (MINEX)

Raychem S.A. (Colombia)

Tyco Electronics Colombia Ltda.

Tyco Healthcare Colombia S.A.

Tyco Services Ltda. (Colombia)

Costa Rica

A&E Productos de Costa Rica, S.A.

ADT Security Services, S.A.

ADT Sistemas de Seguridad S.A. (Branch)

Grinnell Sistemas de Proteccion Contra Incendio S.A. (Costa Rica) (Branch)

8

Kendall Innovadores en Cuidados al Paciente S.A.

Tyco Ingenieria y Construccion, S.A. (Costa Rica) (Branch)

Croatia

Metalska Industrija Varazdin dd (MIV)

Cyprus

Raychem Technologies Limited

TyCom Contracting (Cyprus) Limited

TyCom Networks (Cyprus) Limited

Czech Republic

A.S.S. Allgemeine Sicherheitssysteme GmbH

ADT Security Centre sro (95%)

AQ-Test, spol s.r.o.

BOREAS-Studio grafickych informacnych systemu, s.r.o. (90%)

CYGNI, a.s.

Feuerloschgerate Neuruppin CZ, s.r.o.

GEOMATICS Prague s.r.o.

GHE, a.s.

KAP spol, s.r.o.

MANIBS BRNO, spol, s.r.o. (99%)

Raychem HTS s.r.o.

SEPA, spol. s.r.o. (70%)

SET EC s.r.o.

Schmieding Armatury CZ s.r.o.

TOTAL WALTHER—Stabilni hasici zarizeni spol s.r.o.

Tyco Electronics Czech s.r.o.

Tyco Electronics EC Trutnov s.r.o.

Tyco Integrated Systems s.r.o.

Tyco Valves & Controls Distribution Czech s.r.o.

Zettler CR, spol. s.r.o.

Denmark

ADT Sensormatic ApS

AMP Denmark

CIPE Holding (Denmark) ApS

Sensormatic ApS [Norway Branch]

TSD

Thorn Security Denmark A/S

Tyco Electronics Denmark

Tyco Electronics Far East Holdings ApS

Tyco Healthcare Denmark AS

Tyco Holding I (Denmark) ApS

Tyco Holding I ApS

Tyco Holding II (Denmark) ApS

Tyco Holding III (Denmark) ApS

Tyco Holding IV (Denmark) ApS

Tyco Holding V (Denmark) ApS

Tyco Holding VI (Denmark) ApS

9

Tyco Holding VII (Denmark) ApS

Tyco Holding VIII (Denmark) ApS

Tyco Holding IX (Denmark) ApS

Tyco Holding X (Denmark) ApS

Tyco Holding XI (Denmark) ApS

Tyco Holding XIII (Denmark) ApS

Tyco Holding XIV (Denmark) ApS

Tyco Holding XIX (Denmark) ApS

Tyco Holding XV (Denmark) ApS

Tyco Holding XVI (Denmark) ApS

Tyco Holding XVII (Denmark) ApS

Tyco Integrated Systems (Denmark) ApS

Tyco Valves & Controls Denmark A/S

Urban Media Communications Corporation

Water Holding (Denmark) ApS

Wormald A/S

Dominican Republic

Davis & Geck Caribe, LTD (Dominican Republic Branch)

Raychem Dominicana S.A.

Ecuador

ADT Security Services S.A.

Sociedad Anonima Grinnell Sistemas de Proteccion Contra Incendios S.A.

Tyco Electronics de Venezuela, C.A.

Egypt

Raychem (Delaware) Ltd.

Raychem Egypt Limited

Raychem Technologies Limited, Egypt Branch, Rep. Office

TyCom Networks Egypt Ltd.

El Salvador

Grinnell Sistemas de Proteccion Contra Incendio S.A. El Salvador (Branch)

Estonia

AMP EESTI AS

Fiji

Tyco Fiji Limited

Finland

Scott Health & Safety Oy

Scott Technologies Health & Safety Oy

Sensormatic OY

Total Walther Finland OY

Tyco Electronics Finland Oy

Tyco Healthcare Finland Oy

Tyco Networks (Finland) Oy

10

France

ADT France SA

ADT Sensormatic France S.A.R.L.

ADT Telesurveillance SA

ASE Partners S.A.

Acroba S.A.S

Aerolic Industries S.A.

Alarmes Conseils Services SARL

Alte

Antia S.A.

Auto Suture Europe Holdings, Inc. (Branch)

Auto Suture European Services Center, S.A.

Bayard SA

Bouyer S.A.S.

CAP Services

CEDI Securite SA

CEDP

CEPA

CII Technologies Europe

Cormerais Electronique S.A.

DIS SAS

DSI [France] (34%)

Earth Tech France S.a.r.l.

Ecsas Sarl

Europ Telesecurite SAS

Europinter SA

Euroville France

FINASUR

Fibaly SA

First Alarme

Flow Control Technologies SA

GMC SARL

Generale de Robinetterie Industrielle et de Systemes de Surete (Griss) S.A.

Graphic Controls France S.A.R.L.

Grinnell Distribution France Sarl

Isogard SAS

K D Valves S.A.S

Karner Europe SARL

Kendall Incontinence

Kendall SA

La Commande Numerique

Laje S.A.

Lindapter S.A.

MANIBS France S.A.R.L.

Mallinckrodt Developpement France S.A.S.

Mallinckrodt France SARL

Mather & Platt S.A.S

Mecafrance S.A.

Nellcor Puritan Bennett France Holdings SAS

Nomos SA

Protel S.A.

11

Roybier et Fils

Saccer

Saint-Paul Sécurité SARL

Sayag Electronique International (S.E.I.)

Sci Alain Martin

Sci Becaro

Sci Chanle

Sci Mazal

Sci Tov

Securite Conseil Expertise

Sensormatic S.A.R.L.

Sensormatic Technologies SA

Societe Europeene de Protection Contre L'Incendie S.A.

Societe de Communication et Telesurveillance (S.C.T.)

STRATE S.A.R.L. (95%)

Swair

T.S. France SA

TEP France SA

TGN Euro Link, S.A.

TyCom Contracting (France) SAS

Tyco Electronics France SAS

Tyco Electronics Holding France S.A.S.

Tyco Electronics Idento sas

Tyco Electronics SIMEL SAS

Tyco Europe S.A.

Tyco European Security Holdings SA

Tyco Fermertures Coupe-Feu S.A.S

Tyco Flow Control Holding S.A.

Tyco France Security S.A.

Tyco Healthcare France SAS

Tyco Healthcare Holding Inc (Branch office)

Tyco Healthcare Manufacturing France SAS

Tyco Healthcare SA

Tyco Integrated Systems France

Tyco Networks (France) SAS

Tyco Safety Projects France SARL

Tyco Submarine Systems SARL

Tyco Thermal Controls SA

Tyco Valves & Controls Distribution (France) S.C.A.

Germany

ADT Deutschland GmbH

ADT Finance Germany GmbH

ADT Jalex GmbH

ADT Protecco GmbH

ADT SecurePay GmbH

ADT Secured Payments GmbH

ADT Security Deutschland GmbH

ADT Sensormatic GmbH

ADT Service-Center GmbH

12

ADT Wellcom GmbH

ATR Armaturen-Technik Remscheid GmbH & Co. KG

ATR Armaturen-Technik Remscheid Verwaltungs GmbH

Airport TV Gesellschaft

Babcock Sempell Armaturen-Service GmbH

Bouyer Elektronics GmbH

CKS Systeme GmbH & Co. KG

COSMOS Feuerloeschgeraetebau GmbH

Chemat GmbH Armaturen fur Industrie

Chemische Fabrik Pirna-Copitz GmbH

Cobolt Damm—und Isolierstoff GmbH

Corcom GmbH

DA Export International GmbH

DA Kunststoff GmbH

DEGA Sicherheitstechnik GmbH

DSC International GmbH

Dritte CORSA Verwaltungsgesellschaft mbH

EDS Sicherheitstechnik GmbH

Earth Tech Deutschland GmbH

Earth Tech GmbH

Earth Tech Klartechnik GmbH

Earth Tech Umwelttechnik GmbH

Erhard GmbH & Co

Erhard Verwaltungsgesellschaft mbH

Ernst Schmieding GmbH & Co. KG

Erwin Burbach Maschinenfabrik GmbH

FLN Feuerloschgerate Neuruppin Vertriebs-GmbH

Feuerloschgerate GmbH Neuruppin (FLG)

Flow Control Technologies GmbH

Fondermann GmbH

Frischhut Immobilien GmbH

Geratebau-Beteiligungsgesellschaft mbH

Hellstern GmbH

Helmut Geissler Glasinstrumente GmbH

Hermann Rapp GmbH

Interbrandschutz GmbH

KSK Kunststoff-Strassenkappen GmbH

Karner Europe GmbH

Lindapter GmbH

Ludwig Frischhut Beteiligungs GmbH

Ludwig Frischhut GmbH & Co. KG

MANIBS Spezialarmaturen GmbH & CO. KG

MANIBS Spezialarmaturen Verwaltungs GmbH

MEVA Umwelttechnologie GmbH

Mallinckrodt Chemical GmbH

Mallinckrodt Chemical Holdings GmbH

Mallinckrodt Medical GmbH

Mallinckrodt Medical Holdings GmbH

Mecafrance (Deutschland) GmbH

Medolas Gesellschaft Fur Medizintechnik MBH (80%)

NARVIK-Yarway GmbH

13

NEUHAUS Feuerloschgerate GmbH

Precision Interconnect GmbH

Proner Comatel GmbH

S+S Armaturen Technology GmbH

SABO-Armaturen Service GmbH

STRATE Technologie fur Abwasser GmbH

Schmieding Verwaltungs GmbH

Schmieding-Armaturen GmbH

Schmieding-Armaturen GmbH, Seevetal

Sempell AG

Sozial Werk der Total Walther Feuerschutz Unternehmensgruppe GmbH

TEPG GmbH

TOTAL Feuerschutz GmbH

Telekommunikation Datentechnik Sicherheitssysteme

Thorn Sicherheits GmbH

Tillig Shopmaster GmbH & Co. KG (68.75%)

Tillmann Armaturen GmbH

Total Walther Beteiligungsgesellschaft mbh

Total Walther Feuerschutz Loschmittel GmbH

Total Walther GmbH, Feuerschutz und Sicherheit

Trade GmbH

Tyco Building Services Products (Germany) GmbH

Tyco Building Services Products Division GmbH

Tyco Electromechanical Components Verwaltung GmbH

Tyco Electronics AMP GmbH

Tyco Electronics EC Verwaltungsgesellschaft GmbH

Tyco Electronics Finance GmbH

Tyco Electronics Holding GmbH

Tyco Electronics Idento GmbH

Tyco Electronics Jordan GmbH & Co KG

Tyco Electronics Raychem GmbH

Tyco Electronics pretema GmbH & Co. KG

Tyco European Investments Deutschland GmbH

Tyco Healthcare Deutschland GmbH

Tyco Healthcare Deutschland Manufacturing GmbH

Tyco Holding GmbH

Tyco Integrated Systems Deutschland GmbH

Tyco International Armaturen Holding GmbH

Tyco Networks (Germany) GmbH

Tyco Thermal Controls GmbH

Tyco Umwelttechnik GmbH

Tyco Valves & Controls Distribution GmbH

Tyco Waterworks Deutschland GmbH

USSC (Deutschland) GmbH

Waldenmaier GmbH

WOPF Befestigungselemente GmbH

Wellcom International Sales and Services GmbH & Co. Betriebs KG

Gibraltar

Espion (International) Limited

14

Silver Avenue Holdings Limited

Stralen Investments Limited

Velum 1998 Limited

Verdana Holdings Limited

Greece

ADT Greece S.A. (ADT Hellas) (82.5%)

Earth Tech (Hellas) Limited Liability Company

Greene Insurance Limited

Raychem Hellas E.P.E.

TyCom Networks SA

Tyco Electronics Hellas MEPE

Tyco Hellas S.A.

Guam

ADT Security Services, Inc.

Earth Tech, Inc.

Tyco Networks (Guam), L.L.C.

Tyco Telecommunications (US) Inc.

Guatemala

ADT Sistemas de Seguridad, S.A. (Guatemala)

Grinnell Sistemas de Proteccion Contra Incendio S.A. (Guatemala)

Grinnell Incendio, S.A. de C.V. (Guatemala)

Tyco Ingenieria y Construccion S.A. (Guatemala)

Tyco Submarine Systems, Sociedad Anonima

Honduras

A&E Products de Honduras S.A.

Grinnell Sistemas de Proteccion Contra Incendio S.A. (Honduras) (Branch)

Simplex S.A. de C.V.

Hong Kong

A&E Products (Far East) Limited

ADT Hong Kong Limited

AMP Products Pacific Limited

ATS Technology (Hong Kong) Limited

Batts Far East Limited

CEM (HK) Ltd.

Critchley Asia Limited

Dawson Engineering Limited (50%)

F.A.I. Technology (Hong Kong) Limited

Madison Cable Asia Limited

Mallinckrodt Hong Kong Limited

Original Electromechanical (HK) Limited

Praegitzer International (HK) Limited (99%)

Raychem (HK) Limited

Raychem China Limited

15

Raychem China Limited NV

Sensormatic (HK) Limited

Sensormatic (HK) Limited

Sensormatic Far East Ltd

Simplex Asia Limited

Tak Cheong (Yau Kee) Engineering Ltd.

Thorn Security (Hong Kong) Limited

Transpower Technologies (HK) Limited

Tyco Electronics H.K. Limited

Tyco Engineering & Construction (Hong Kong) Limited

Tyco Fire and Security Services China Ltd

Tyco Flow Control Hong Kong Limited

Tyco Healthcare (HK) Co., Ltd.

Tyco Healthcare (HKSAR) Limited

Tyco Networks (Hong Kong) Limited

Wormald Engineering Services Ltd.

Hungary

ADT Sensormatic Kft.

Brueder Mannesmann Hungary Kft (99%)

Earth Tech Hungary Engineering Limited Liability Company

KSK Német—Magyar Szerszámtervezö és Készitö KFT (67.62%)

Raychem Sales and Marketing Kft.

Total Walther Contractor and Engineer Ltd.

Total Walther Kft.

Tyco Building Services Products (Hungary) Kft

Tyco Electronics EC Electromechanical Components Production Ltd Liability Co.

Tyco Electronics Hungary Ltd.

Tyco Electronics MPI Automotive Components Production Ltd

Tyco TDI Hungary Electronical Parts Manufacturing Customs Free Zone Limited Liability Company

Tyco Valves & Controls Distribution Ltd

India

A&E India Pvt Ltd

Hofincons Infotech & Industrial Services Pvt Ltd

Mallinckrodt International Corporation

Modern Alarms & Electricals Pvt Ltd.

Precision Interconnect India Pvt Ltd

Raychem (Delaware) Ltd. (Indian Branch)

Raychem RPG Limited (50%)

Sakhi-Raimondi Valves (India) Pvt Ltd

Sanmar Holdings Pvt Ltd.

Sempell Valves Ltd. (50%)

Simplex Building Systems Pvt Ltd

TEI Technologies India Pvt Limited (50%)

Tyco Electronics Corporation Pvt Limited

Tyco Electronics Systems India Pvt Ltd

Tyco Electronics Tools India Pvt. Ltd.

Tyco Engineering and Construction Pvt Ltd

16

Tyco Healthcare India Pvt Limited

Tyco Submarine Systems Ltd.—India Branch

Tyco Valves and Controls India Pvt Limited

Indonesia

Ansul Incorporated (Branch)

P.T. Reid Crowther Indonesia

PT Dulmison Indonesia

PT Tyco Eurapipe Indonesia

PT. ODG Wormald Indonesia

PT Tyco Asia Services Indonesia

PT. Tyco Precision Electronics

Tyco Healthcare Pte Ltd—Indonesia Representative Office

Water Holdings Corporation, Regional Rep Office

Ireland

ACE Alarm Systems Limited

ADT Fire & Security Limited

ADT Limited

Allied Alarms Limited

Allied Metal Products Limited

Allied Security Products Ltd.

Audio Education Limited

B & B Electronics Limited

Brangate Limited

Earth Tech Holdings Limited

Earth Tech Ireland Limited

Flo-Check Valves Limited

Fondermann & Co. (Ireland) Limited

Hanlon-O'Grady & Co. Limited

IAMASCO Plc

Jones Environmental (UK) Limited

Jones Environmental Holdings Limited

Jones Environmental Limited

Mallinckrodt Holdings Ireland

Mallinckrodt International Financial Services Company

Mallinckrodt Medical

Mallinckrodt Medical Holdings Ireland

Mallinckrodt Medical Imaging—Ireland

Mallinckrodt Medical International Holdings

Mather & Platt Ireland Limited

Mather & Platt Ireland Manufacturing Limited

Modern Security Systems Limited

Nellcor Puritan Bennett Ireland

Nellcor Puritan Bennett Ireland Holdings

SEC Investments of Ireland Ltd.

Securitag Limited

Sensormatic Electronics Corporation Ireland Ltd.

Sensormatic European Distribution Ltd.

Sensormatic Ireland Limited

17

Summerhouse Limited

Tyco Building Services Products (Ireland) Limited

Tyco Electronics Ireland Limited

Tyco Far East Holdings Limited

Tyco Healthcare Ireland Limited

Tyco Healthcare Services Europe Ireland

Tyco International Finance Ireland

Tyco Ireland Limited

Tyco Networks (Ireland)

Tyco Tech Holdings Ireland

Tyco Telecommunications (Ireland)

Witham

Isle of Man

Mallinckrodt Medical Isle of Man

Israel

Raphael Mitzpe Ramon Ltd.

Raphael Valves Industries (1975) Ltd.

Raychem Limited [Israel]

Sintram Limited [Israel] (50%)

TCM CONTRACTING (ISRAEL) LTD.

TCM NETWORKS (ISRAEL) LTD.

Tyco Electronics Israel Ltd.

Tyco Healthcare (Israel) Ltd.

Italy

ADT Italia Srl

Belgicast Italia S.R.L.

Bentel Security Srl

Biffi Italia S.r.l.

Earth Tech (Italy) S.R.L.

Karner-Batts SRL

Laesa Technology Srl

Mallinckrodt DAR Srl

Mallinckrodt Italia Srl

Politermica Distribution S.r.l.

Sabo Foam Srl

Sensormatic EC SRL

Tyco Adhesives Italia S.p.A.

Tyco Contracting (Italy) Srl

Tyco Electronics AMP Italia Products S.p.A.

Tyco Electronics AMP Italia S.p.A.

Tyco Electronics MPI Italia S.r.l.

Tyco Electronics Raychem (Italia) S.p.A.

Tyco Electronics-Raychem SpA

Tyco Foam Italia Srl

Tyco Healthcare Italia, S.p.A.

Tyco Networks (Italy) Srl

18

Tyco Valves and Controls Italia S.r.l.

Wormald Italiana S.P.A.

Zettler App. Eletricci S.p.A.

Zettler S.R.L.

Japan

AMP Technology Japan Ltd

Ansul Incorporated-Japan Branch Office

Aomori Dry-Chemical Kabushiki Kaisha

Businessland Japan Company Ltd.

Chiba Atsuryoku Youki Seizo Kabushiki Kaisha

Hokkaido Dry-Chemical Kabushiki Kaisha

Kendall Healthcare Products (Japan) Co., Ltd.

Kitamura Valve Mfg. Co., Ltd.

Nihon Elcon K.K.

Nippon Dry Maintenance Co., Ltd.

Nippon Dry-Chemical Kabushiki Kaisha (92.24%)

Nippon Sherwood Medical Industries Ltd.

Precision Interconnect International Kabushiki Kaisha

Precision Interconnect International Ltd.

Touch Panel Systems Corporation

TyCom Contracting (Japan) K.K.

Tyco Electronics AMP K.K.

Tyco Electronics EC KK

Tyco Electronics Raychem K.K.

Tyco Flow Control K.K.

Tyco Healthcare Japan, Inc.

Tyco Healthcare Products (Japan) Co., Ltd.

Tyco Networks (Japan) K.K.

Yamaguchi Tokushu Seiko K.K.

Luxembourg

ADT Finance S.A.

ADT Luxembourg S.A.

CIPE Luxembourg S.A.

NEUHAUS Feuerloschgerae GmbH Niderlassung Luxembourg

TCC Holding (Luxembourg) S.a.r.l.

TCN Holding (Luxembourg) S.a.r.l.

TyCom Holdings A Sarl

TyCom Holdings B Sarl

TyCom Holdings C Sarl

TyCom Holdings II SA

Tyco Group S.a.r.l.

Tyco Holdings S.a.r.l.

Tyco International Group S.A.

Valera Holdings S.a.r.l.

Malaysia

ADT Services (M) Sdn. Bhd.

19

AMP Products (Malaysia) Sdn. Bhd.

Brunsfield Thorn Technology Sdn. Bhd. (50%)

Euratech (Malaysia) Sdn. Bhd.

Grinnell Supply Sales (Malaysia) Sdn. Bhd. (50%)

Innodouble (M) Sdn. Bhd. (51%)

Japan Original (M) Sdn Bhd

Kijang Merger Sdn Bhd

Kumpulan Injap Kebesan (M) Sdn. Bhd.

Life Engineering Sdn. Bhd.

Mallinckrodt Baker Sdn. Bhd.

Mediquip Sdn. Bhd.

Praegitzer Asia Sdn. Bhd.

Raychem Sdn. Berhad.

Senivisa Trading Sdn. Bhd.

Sigmaform (M) Sdn. Bhd.

Simplex Fire & Security Sdn. Bhd.

Tyco Electronics (Malaysia) Sdn. Bhd.

Tyco Electronics Dulmison (Malaysia) Sdn. Bhd.

Tyco Flow Control (Malaysia) Sdn. Bhd.

Tyco Grinnell KM Sdn. Bhd.

Tyco Healthcare Medical Supplies Sdn Bhd

Tyco Manufacturing (Malaysia) Sdn. Bhd.

Tyco Services Malaysia Sdn. Bhd.

Tyco Valves & Controls (M) Sdn. Bhd.

Marshall Islands

C.S. Tyco Decisive Inc.

C.S. Tyco Dependable Inc.

C.S. Tyco Durable Inc.

C.S. Tyco Provider, Inc.

C.S. Tyco Reliance Inc.

C.S. Tyco Resolute Inc.

C.S. Tyco Responder Inc.

Coastal Cable Ship Co. Inc.

Mauritius

Sensormatic Electronics (Mauritius)

TyCom Networks (Mauritius) Limited

Tyco Asia Investments Limited

Mexico

ADT Security Services, S.A. de C.V.

AMP Amermex, S.A. de C.V.

Aguas Tratadas de Cadereyta, S. de R.L. de C.V. (99.96%)

Aguas Tratadas de Madero, S. de R.L. de C.V. (99.96%)

Ansul Mexico, S.A. de C.V.

Atlatec Ambiental, S.A. de C.V.

Batts de Mexico S.A. de C.V.

Carlisle Recycling de Mexico S.A. de C.V.

20

Cima de Acuna S.A. de C.V.

CoEv Servicios de Matamoros, S.A. de C.V.

CoEv de Matamoros, S.A. de C.V.

Construser, S.A. de C.V.

Corcom, S.A. de C.V.

Earth Tech Acquisition Entity, S.A. de C.V.

Earth Tech Mexican Holdings, S.A. de C.V.

Earth Tech Mexico S.A. de C.V.

Especialidades Medicas Kenmex, S.A.

Euro-Flex de Mexico, S.A. de C.V.

Fire Equipment de Mexico S.A. de C.V.

Gema Servicios Ambientales, S.A. de C.V.

Grupo Empresarial de Mejoramiento Ambiental, S. de R.L. de C.V.

Kelsar S.A. de C.V.

Kendall de Mexico S.A. de C.V.

Kenmex Holding Company, S.A. de C.V.

Lineas de Transmision 407 Altamira, S.A. de C.V.

MMJ S.A. de C.V.

Mallinckrodt Baker S.A. de C.V.

Mallinckrodt Medical S.A. de C.V.

Manufacturas y Conectores TYCO, S. de R.L. de C.V.

Nellcor Puritan Bennett Mexico, S.A. de C.V.

Paragon-Mabesa International, S.A. de C.V.

Plasticos Bajacal, S.A. de C.V.

Plasticos Mexical S.A. de C.V.

Potter & Brumfield de Mexico, S.A. de C.V.

Promotora de Aguas Potosinas, S.A. de C.V.

Rafypak, S.A. de C.V.

Raychem Juarez, S.A. de C.V.

Raychem Tecnologias, S.A. de C.V.

Raychem Tijuana Services, S.A. de C.V.

Retail Group de Mexico International, S.A. de C.V.

Robinson Services S.A. de C.V.

Rust Servicios Ambientales E Infraestructura, S.A. de C.V.

Securitylink S.A. de C.V.

Servicios de Aguas Nogales, S.A. de C.V.

Simplex Grinnell S.A. de C.V.

Tyco Electronics Mexico, S.A.

Tyco Electronics Power Systems de Mexico, S.A. de C.V.

Tyco Electronics Tecnologias S.A. de C.V.

Tyco Engineering and Construction S.A. De C.V.

Tyco Services, S.A. de C.V. (Mexico)

Tyco Submarine Systems, S.A. de C.V.

Tyco Valves & Controls de Mexico, S.A. de C.V.

Netherlands

ADT Canada B.V.

ADT Finance B.V.

ADT Security Services BV

AMP Automotive Development Centre B.V.

21

AMP Laminates B.V.

AMP Taiwan B.V.

AMP Trading B.V.

Ampliversal B.V.

Auto Suture Belgium B.V.

CIPE Nederland B.V.

Descote Benelux B.V.

European Valves & Fittings B.V.

Glearth B.V.

Hovap Beheer B.V.

Hovap Consolidated B.V.

Hovap Holding B.V.

Hovap International (Holland) B.V.

IBS Inter Brandbeveiliging & Service B.V.

Image Scan ID Systems BV

Infologic Nederland B.V.

Intervalve B.V.

M/A-COM Eurotec B.V.

MDC Meldkamer B.V.

Mallinckrodt Baker B.V.

Mallinckrodt Baker Deutschland, Zweigniederlassung der Mallinckrodt Baker B.V.

Mallinckrodt Benelux B.V.

Mallinckrodt Europe B.V.

Mallinckrodt Holdings B.V.

Mallinckrodt Medical B.V.

Mallinckrodt Operations B.V.

Mallinckrodt Services B.V.

Narvik-Yarway B.V.

Netwerk 3 B.V.

Nordic Water Benelux BV

Pompenfabriek "Anema" B.V.

Pritchard Services Group BV

Professional Fixings B.V.

Protector Technologies BV

Sensormatic B.V.

Sensormatic Distribution & Holdings B.V.

Sensormatic Investments Associates B.V. (90%)

Sherwood Medical Nederland B.V.

Strate B.V.

Svenska Skum B.V.

TVM Europe B.V.

Technische Handelsbureau en Armeturenfabriek Wafrega B.V.

Total Walther B.V.

TyCom Contracting (Netherlands) B.V.

Tyco Building Services Products (Netherlands) B.V.

Tyco Building Services Products B.V. Branch Office

Tyco Electronics Nederland B.V.

Tyco Healthcare Nederland BV

Tyco Integrated Systems B.V.

Tyco Labs Holland I BV

Tyco Networks (Netherlands) B.V.

22

Tyco Thermal Controls BV

Tyco Valves & Controls B.V.

Tyco Waterworks B.V.

Uni Joint B.V. (94.08%)

Unistrut (Benelux) B.V.

Vonk Chokes B.V.

Vonk Enschede BV

Wafrega Modellen B.V.

Zettler Netherlands N.V.

New Zealand

Armourguard Security Limited

Danks Bros Limited

Keystone New Zealand Limited

New Zealand Valve Company Limited

Nortrac Engineering Limited

Pace Network Services Limited (98%)

Resolve Engineering Pty Limited (New Zealand Branch)

Sensormatic New Zealand Limited

Tyco Construction Technologies NZ Limited

Tyco Electronics NZ Limited

Tyco Flexonics NZ Limited

Tyco Flow Control Pacific Pty Limited (New Zealand Branch)

Tyco Healthcare Limited

Tyco Lambda (New Zealand Branch)

Tyco New Zealand Limited

Tyco Projects (Australia) Pty Limited (New Zealand Branch)

Nicaragua

Grinnell Sistemas de Proteccion Contra Incendios S.A. (Nicaragua) (Branch)

Tyco Electronics de Venezuela, C.A.

Tyco Ingenieria y Construccion, S.A. (Nicaragua) (Branch)

Norway

ADT Sensormatic ApS NUF (ADT)

Tyco Building Services Products (Norway) AS

Tyco Electronics Norge AS

Tyco Healthcare Norge AS

Tyco Networks Norway AS

Tyco Thermal Controls Norway AS

Wormald Signalco A/S

Pakistan

Raychem Technologies Limited, Cypress (Pakistan)

Tyco Fire & Security Pakistan (PVT) Ltd.

Tyco Healthcare Pte Ltd, Parkistan Liaisan Office, Karachi

Panama

23

Kendall de Panama S.A.

Tyco Submarine Systems, Inc.

Peru

ADT Security Services S.A.

TyCom Networks (Peru) S.A.

Tyco Electronics Del Peru S.A.C.

Tyco Services S.A. (Peru)

Philippines

Carlisle Philippines, Inc.

Earth Tech Consulting Services (Philippines) Inc.

Mallinckrodt International Corporation

Tyco Electronics Philippines, Inc.

Tyco Flow Control, Inc-Philippine Branch Office

Tyco Healthcare Pte. Ltd. (Philippines Representative Office)

Tyco Integrated Systems Philippines Inc.

Tyco PIECO Corporation, Inc.

Poland

ADT Sensormatic Poland Sp zoo.

ASP Armaturen Schilling Puspas Polska Sp.z.o.o. (90%)

Erhard Armatura Sp. z o.o.

M/A-COM Poland Sp. z o.o.

Mallinckrodt Polska Sp.z o.o.

Raychem Polska Sp. z.o.o

STRATE Sp.z.o.o.

Schilling Armatura Polska Sp. Z.o.o.

Schmieding Armaturen Poland sp. z. o.o

TYCO Electronics Polska Sp.z.o.o.

TyCom Contracting Poland Spolka z ograniczona odpowiedzialnoscia

Tyco Integrated Systems Sp.z o.o.

Tyco Polska Sp.z.o.o.

Tyco Valves & Controls Polska Sp.z.o.o.

Tycom Networks Poland Spolka z orgraniczona odpowiedzialnoscia

Portugal

AMP Portugal—Conectores Electricos E Electronicos LDA

Industra—Comercio de Equipamentos Industrias, Norte, Lda.

Industra-Comercio de Equipamentos Industriais, SA

KTM Valvulas Europa SA

Karner-Europe, Lda

Pressini-Prestacao de Servicos de Electricidade Naval de Indistria, Lda.

S.P.D.-Sistemas De Proteccao Desenvolvidos LD (90%)

Sensormatic Proteccao Contra Furto, Lda (97.4%)

TCC (Portugal)—Instalacao E Manutencao De Redes, Unipessoal Lda.

Tyco Electronics Componentes Electromecanicos Lda.

Tyco Healthcare Portugal, Produtos De Saude Lda.

Tyco Integrated Systems (Portugal), Unipessoal Lda.

Tyco Integrated Systems Portugal Lda

24

Tyco Networks (Portugal)—Instalacao E Manutencao De Redes, Unipessoal Lda.

Tyco Tech—Engenharia, Unipessoal, Lda.

Puerto Rico

Ansul, Incorporated

Earth Tech, Inc.

Grinnell Corporation (Branch)

M/A-COM, INC.

Mallinckrodt Caribe, Inc. (Puerto Rico branch)

Puerto Rico Sensormatic Electronics Corp. (Branch)

Raychem International Manufacturing Corporation

SecurityLink from Ameritech of Puerto Rico, Inc.

Sensormatic del Caribe, Inc. (Puerto Rico)

SimplexGrinnell of Puerto Rico Inc.

Simplex Time Recorder Co. (Branch)

Tracer Construction Company

Tri-Ed Puerto Rico Ltd. Inc.

TyCom Networks (Puerto Rico) Corp.

Tyco Electronics Corporation (Branch)

Tyco Electronics Puerto Rico Inc.

Tyco Valves & Controls—Puerto Rico Corporation

Republic of Slovenia

Tyco Electronics d.o.o. (Slovenia)

Republic of Ukraine

Kiev Representative Office of Raychem GmbH

Romania

Duna Armatura Bucuresti S.R.L.

Karner Europe SRL

Robinete Raf Campina, S.A.

SC FCT Industrial Srl

Russia

AOST Malen Ltd

Auto Suture Surgical Instruments

ELSICA (TOO ELSICA)

Moscow Representative Office of Raychem GmbH

Rayenergo (ZAO Rayenergo)

Sensormatic B.V. (Russian Representative Office)

TyCom Networks (Russia)

Saudi Arabia

Raychem Saudi Arabia Limited

Tyco Healthcare—Saudi Arabia

Singapore

ADT Security Services (Singapore)

AMP Singapore Pte. Ltd.

ATS Traffic Pte Ltd (50%)

Aston & Lee Engineering

Central Spraysafe Company PTE Limited

Crompton Instruments (South-East Asia) Pte. Ltd.

25

Dynavision Electronics Pte Ltd

Greenspan Singapore Private Limited

Indeco Engineers (Pte) Ltd

Indeco M & E Engineering Pte Ltd

Infologic Pte Ltd

Keystone Valves Singapore

Mallinckrodt Asia Pacific Pte. Ltd.

O'Donnell Griffin Instrument & Electrical Contractor

Raychem Singapore Pte. Limited

Sensormatic Asia/Pacific, Inc. (Branch)

Simplex Fire & Security Systems Pte Ltd

TEPG Pte Ltd

Thorn Security

Thorn Services

Tyco Building Services Pte. Ltd.

Tyco EPG Pte Ltd

Tyco Electronics AMP Manufacturing (S) Pte Ltd

Tyco Electronics Manufacturing Singapore Pte. Ltd.

Tyco Electronics Singapore Pte Ltd

Tyco Engineered Products (Branch)

Tyco Fire & Building Products Asia Pte. Ltd.

Tyco Fire, Security & Services Pte. Ltd.

Tyco Flow Control Asia

Tyco Flow Control Pte. Ltd.

Tyco Healthcare Pte. Ltd

Tyco Integrated Systems

Tyco International Asia, Inc. (Singapore Branch) (Branch of Bahamas Company)

Tyco International Asia, Inc., Singapore Branch (Branch of Delaware, USA Company)

Tyco Networks (Singapore) PTE LTD

Tyco Pipe Systems Pte Ltd

Tyco Valves & Controls (Branch)

Tyco Water Asia

Wormald Marine Services

Slovak Republic

Tatra Armatura s.r.o. (80%)

Total Walther—Stabilne hasiace zariadenia s.r.o.

South Africa

A&E Products South Africa (Proprietary) Limited

ADT Security (Proprietary) Ltd (South Africa)

ADT Security Guarding (Proprietary) Limited

Accucomp (Pty.) Ltd.

Accufusion (Pty.) Ltd.

Ansul South Africa (Proprietary) Limited

Baron Armed Reaction (Pty) Ltd

Belgicast (PTY)

Czechtech (Pty) Ltd.

Good Hope Security (Pty) Ltd

Intervalve (Pty) Ltd.

Kendall Company of South Africa (Pty) Limited, The

Klipton Properties (Pty) Ltd

26

MeasureTech (PTY) Ltd.

Nestivad Investments (Pty) Ltd

PMED Investments (Pty) Ltd

Paramed Corporate Security (Pty) Ltd. [South Africa] (55%) JV

Paramed Security North (Pty) Ltd

Paramed Security West (Pty) Ltd

Pararent (Pty) Ltd

REM 172 (Pty) Ltd

Reaction Force Guards (Pty) Ltd

Reaction Force Patrols (Pty) Ltd

Sentry Response (Pty) Ltd

Sentry Security (Pty) Ltd

Sentry Security Cape (Pty) Ltd

Sentry Security Financial Services (Pty) Ltd

Sentry Security Guarding (Pty) Ltd

Sentry Security KwaZulu-Natal (Pty) Ltd

Sentry Security Pretoria (Pty) Ltd

Solution 22 (Pty) Ltd

Strikeforce Security (Pty) Ltd

TM Monitoring (Pty) Ltd

Trigate (Pty.) Ltd.

Trigate Umndeni (Pty.) Ltd. (50%)

Trinance (Pty.) Ltd.

Tyco Electronics South Africa (Proprietary) Ltd.

Tyco Healthcare (Proprietary) Limited

Vadigor Investments (Pty) Ltd

Volberay Investments (Pty) Ltd

South Korea

A&E Products Korea Ltd (Bahamas, Bermuda), Korea Branch

ADT Security Co., Ltd.

Batts Korea Ltd. (50%)

Caps Co. Ltd.

Dong Bang Electronic Industrial Co. Ltd. (99.5%)

Dong Bang Minerva Co., Ltd

Kendall Medical Ltd.

Keystone Valve (Korea) Limited

Mallinckrodt Baker International, Korea Branch

Original Electromechanical (Korea) Ltd

Tyco Adhesives Korea Co., Limited

Tyco Electronics AMP Korea Limited

Tyco Electronics Raychem Korea Limited

Tyco Healthcare Korea, Inc.

Tyco Marine Services Company Limited

Tyco Marine Services Korea Company Limited

Tyco Networks (Korea), Inc.

Tyco Thermal Controls Korea Ltd.

Spain

ADT Espana Servicios de Seguridad, S.L.

Automated Security International, S.A.

Belgicast Internacional S.L.

27

Controles Graphicos Ibericos, S.A.

Diamit, S.L.

Earth Tech (Spain), S.L.

Europuspas S.L. (90%)

Kendall Espana S.A.

Mallinckrodt Medical S.A.

Mondragon Telecommunications S.L.

Nellcor Iberia S.L.

Sensormatic Electronics Corporation S.A.

Sensormatic Electronics Corporation Services SA

Tyco Electronics AMP Espana, S.A.

Tyco Electronics Printed Circuit Group España, S.L.

Tyco Electronics Raychem SA

Tyco Healthcare Spain SL

Tyco Iberia, S.L.

Tyco Marine, S.A.

Tyco Networks Iberica, S.L.

Wormald Mather & Platt Espana, S.A.

Sri Lanka

A&E Products Lanka (PVT) Ltd

28

Sweden
ADT Sensormatic AB

DISAB Diagnostic Imaging Holding AB

Dissolve AB

Erichs Armatur AB

Formex AB

Ingenjorsfirman Formex AB

Karner Europe AB

Mallinckrodt Sweden AB

Nordic Water Engineering AB

Nordic Water Holding AB

Nordic Water Products AB

Prefabspecialisten Sprinkler i Lammhult Aktiebolag

Svenska Skum International AB

Svenska Skumslacknings AB

Thorin & Thorin AB

TyCom Contracting AB

Tyco Building Services Products (Sweden) AB

Tyco Electronics Svenska AB

Tyco Healthcare Norden AB

Tyco Networks (Sweden) AB

Tyco Thermal Controls Nordic AB

Wormald Fire Systems A.B.

Zickert Products AB

Switzerland

ADT Secured Payments Division SA

ADT Security (Switzerland) SA

ADT Sensormatic AG

ADT Services AG

Ammo AG

Ancon (Schweiz) AG

Axicom AG

Decolletage SA St. Maurice (DSM)

Grinnell Simplex Finance GmbH

Kendall Finance GmbH

Mallinckrodt Switzerland Limited

Neotecha AG

Robatel SA

Sensormatic Distribution Inc, Dover, Steinhausen Branch

Sherwood Services AG

TCN Holding (Luxembourg) Sàrl, Schaffhausen branch

Total Feuerschutz AG

TyCom Finance AG

Tyco Delta Services AG

Tyco Electronics (Schweiz) AG

Tyco Electronics (Schweiz) HFI AG

Tyco Electronics (Schweiz) Produktions AG

Tyco Electronics Augat AG

Tyco Electronics Logistics AG

Tyco Flow Services AG

29

Tyco Gamma Services AG

Tyco Group S.à.r.l., Luxemburg (L), (Schaffhausen branch)

Tyco Healthcare Group AG

Tyco Healthcare Retail Services AG

Tyco Healthcare Schweiz AG

Tyco Holdings Sàrl, Luxemburg (L), (Schaffhausen branch)

Tyco Integrated Systems AG

Tyco International Finance AG

Tyco International Finance Alpha GmbH

Tyco International Holding AG

Tyco International Services AG

Tyco Plastics Services AG

Tyco Zeta Services AG

Taiwan

A&E Hangers Taiwan Co., Ltd.

ADT Security Services Ltd

AMP Manufacturing Taiwan Co. Ltd

Carlisle Taiwan, Inc.

Descote Asia Co., Ltd

FAI Technology (Taiwan) Co. Ltd

Kaung Kai Ind. Co., Ltd.

Raychem Pacific Corporation (50%)

Sensormatic Far East Limited Taiwan Branch

Taiwan Superior Electric Co., Ltd.

Taiwan Valve Company Ltd

Taliq Taiwan Limited

Tyco Electronics Taiwan Co., Ltd.

Tyco Healthcare (Taiwan) Ltd.

Tyco Holdings (Bermuda) No. 7 Limited, Taiwan Branch

Tyco Valves & Controls (Taiwan) Limited

Wormald Engineering Systems Taiwan Ltd.

Thailand

ACS Asia (1996) Company Ltd.

ADT Sensormatic (Thailand) Co., Ltd.

Indeco Services Co., Limited

Kendall Gammatron Limited (85%)

M/A-COM Private Radio Systems Asia Pacific Ltd.

Raychem Thai Limited

TAMS Consultants (Thailand) Limited

Tyco Earth Tech (Thailand) Limited

Tyco Electronics (Thailand) Ltd

Tyco Electronics Dulmison (Thailand) Co., Ltd.

Tyco Healthcare (Thailand) Limited

Tyco International (Thailand) Limited

Tyco Valves & Controls (Thailand) Limited

WHC Holdings Limited

Windmill Street Limited

30

Turkey

Earth Tech Engineering Construction Trade

Karner Europe Aski Ticaret Limited Sirketi

Raychem N.V. (Irtibat Burosu)

TyCom Network Ve Telekomunikasyon Sistemleri Insaat Tesis Hizmetleri Ve Ticaret Limited Sirketi

Tibset Steril Tibbi Aletler Sanayi ve Ticaret Anonim Sirketi

Tyco Elektronik AMP Ticaret Limited Sirketi

Tyco Saglik A.S.

Yapi ICF Kaiser Engineering and Consultancy

United Arab Emirates

Ancon (Middle East) Fze

Ansul Incorporated (Branch)

DA Export International FZE

Dorman Smith Switchgear LLC

Tyco Electronics Middle East FZE

United Kingdom

A G Marvac Limited

A&E Karner Limited

A.E. Silver Limited

A.R.C. Fire Protection Ltd.

A.V.S. Systems Limited

ADT (UK) Holdings PLC

ADT (UK) Limited

ADT Aviation Limited

ADT Finance PLC

ADT Fire & Security PLC

ADT Group PLC

ADT Linen Services Limited

ADT Pension Fund Limited

ADT Securities Limited

ADT Security Systems Limited

ADT Travel Group Limited

ADT Travel Holdings Limited

ADT Travel Limited

ADT Trustees Limited

ADT UK Investments Limited

AFA-MINERVA Limited

AIJ Security Limited

AMP Finance Limited

AMP of Great Britain Limited

Aberdeen Environmental Services (Holdings) Limited

Aberdeen Environmental Services Limited

Abbey Security International Limited.

Able Arts Holdings Ltd.

Acorn Security Systems (UK) Limited

Adeview Limited

Advanced Absorbent Products Holdings Limited

31

Advanced Security Installations Limited

Alexander McKay Limited

American District Telegraph Services International Limited

Amp of Great Britain

Ancon (MBT) Couplers Limited

Ancon Holdings Limited

Ancon Limited

Ancon Stainless Steel Fixings Limited

Argus Fire & Security Group Plc

Argus Fire Systems Limited

Argus Group Plc

Argus House Limited

Argyle Medical Industries (U.K.) Limited

Ash Group Services Limited

Atlanta Engineering Limited

Atlantic Plastics Limited

Atlas Fire Engineering Limited

Audix Systems Limited

Auto Auctions Limited

Auto Suture U.K. Limited

Auto Suture UK Export Limited

Automated Loss Prevention Systems International Limited

Automated Loss Prevention Systems Limited

Automated Security (Holdings) PLC

Automated Security (International) Limited

Automated Security (Investments) Limited

Automated Security (Properties) Ltd.

Automated Security Information Systems Technology Limited

Automated Security Limited

Avalon Emergency Systems Limited

B & H (Nottingham) Limited

BCA (Auctions) Limited

BCA Holdings Limited

BGP-Reid Crowther Limited

Bastion Security Systems Limited

Belclere Limited

Benn Security Systems Limited

Bissell Healthcare Limited

Bond Security Services Limited

Bond Security Systems Limited

Bowthorpe EMP Limited

Bowthorpe Industries Limited

Britannia Monitoring Services Limited

Britannia Security Group (C.I.) Limited

Britannia Security Group Limited

Britannia Security Systems (Midlands) Limited

Britannia Security Systems Limited

Brocks Alarms Limited

Brook Security Services Limited

C.I.S. (Cast Iron Services) Limited

CAS Security Limited

32

CCTV Limited

CDK U.K. Limited

CEM Systems Ltd.

CIS Wilson Limited

CIS Wilson Pipe Fittings Limited

CTT Limited

Capitol Alarms Limited

Castle Gate Alarms (Northern Ireland) Limited

Central Alarm Securities Limited

Central Spraysafe Company Limited

Certes Security Plc

Charles Winn (Valves) Limited

Cheshire Alarm Services Ltd.

Clarion Security Systems Limited

Cleaners Limited

Clen Group Limited

Coin Machine Sales Limited

Collmain Customer Installations Limited

Collmain Customer Services (C.I.) Limited

Collmain Plc

Collmain Services Limited

Comforta Healthcare Ltd. (UK)

Communication & Tracking Services Limited

Communication Accessories Limited

Component Engineering Services Limited

Compression Terminals & Tools Limited

Confab International Limited

Control Equipment Limited

Controlled Electronics Management Systems Limited

Countryside Security Limited

Countrywide Leisure Holdings Limited

Crime Seen Ltd.

Critchley Finance (UK) Limited

Critchley Group Limited

Critchley Group Trustee Limited

Critchley HSI Systems Limited

Critchley Limited

Critchley Tecpro Limited

Crosby Valves & Engineering Company Ltd.

Custom Card Holdings Ltd

Custom Card Services International Limited

D.J. Security Alarms Limited

Ditel Limited

Descote Limited

Discreet Disposables Ltd.

Distribution and Transmission Equipment Limited

Dong Bang Minerva (UK) Limited

Dorman Smith Holdings Limited

Dorman Smith Switchgear Limited

Ductile Steel Processors Limited

Dulmison (UK) Ltd.

33

Earth Tech Engineering Limited

Edward Barber & Company Limited

Edward Barber (U.K.) Limited

Electra Systems Limited

Ellis Son & Paramore Limited

Elo TouchSystems Limited

Emos Information Systems Limited

Emos Rentals Limited

Erhard Valves Ltd

Ever Two Limited

Ever Four Limited

Ever Three Limited

Excelsior Security Services Limited

Exeter Insurance Company Limited

F.C.T. Services (UK) Limited

Farnham Limited

Figgie (G.B.) Ltd.

Figgie (U.K.) Limited

Figgie Investment Trustee Ltd.

Figgie Pension Trustee Ltd.

Figgie Sportswear (U.K.) Limited

Figgie Sportswear Limited

Fire Alarms Services (UK) Limited

Fire Defender (U.K.) Ltd.

Fire Safety Inspection Company Limited

Fire Security Services Ltd.

Firewise Equipment Limited

Flowlyne (UK) Limited

Ford Electronic Services Limited

Freedom Systems Limited

Galequest (Electronics) Limited

Ganmill Limited

Gardner Security

General Cleaning Contractors Limited

Goldcrest Security Limited

Goyen Controls Co UK Limited

Gresham Land and Estates (ADC) Limited

Grinnell (U.K.) Ltd.

Group Sonitrol Security Systems Limited

Guardian Alarms Wgtn. Limited

Hawley International Finance Limited

Hemax Limited

Hindle Cockburns Limited

How Fire Limited

How Fire Maintenance Limited

Hygood Limited

Image Scan ID Systems Limited

Image Surveillance Systems Limited

ImageScan UK Limited

Inbrand Holdings Limited

Inbrand Limited

34

Inbrand UK Limited

Independent Valve & Pipeline Services Limited

Industrial Cleaners (UK) Limited

Integrated (Fire & Safety) Services Limited

Intellectual Systems Ltd.

Isopad Limited

JEL Building Management Limited

JEL Building Management Systems Limited

JMC Rehab Limited

Jades Doors Limited

James Deacon Security Limited

Jessar Engineering Limited

KS Lift Services Limited

Kam Servi-Sys Limited

Karner Europe (UK) Ltd.

Kean and Scott Limited

Kendall-Camp Pension Trustees Limited

Keystone Valve (U.K.) Ltd.

Kingsclere Investments Ltd.

Knogo (UK) Limited

Kurtbrook Limited

Lafayette Healthcare Limited

Lastonet Products Limited

Linsdale (Fire & Security) Limited

M.A.M. Rubber Manufacturing Company Limited

M/A-COM (UK) Limited

M/A-COM Greenpar Limited

M/A-COM Limited

MKG Medical U.K. Ltd.

Macron Safety Systems (UK) Limited

Madison Cable Corp.

Madison Cable Limited

Maidstone Fire Protection Limited

Malgor Security Plc

Mallinckrodt Chemical Holdings (U.K.) Ltd.

Mallinckrodt Chemical Limited

Mallinckrodt Medical Argentina Limited

Mallinckrodt Medical Holdings (U.K.) Limited

Mallinckrodt U.K. Ltd.

Management and Control Systems Limited

Manton Plastics Limited

Markden No. 7 Limited

Masco Holdings Limited

Masco Security Systems Limited

Mather & Platt (Exports) Ltd.

Mather & Platt Fire Protection Limited

McMillan Fire Alarms Limited

McMillan Maintenance Limited

Microdot Connectors Europe Limited

Microwave Associates Limited

Mid-Ulster Alarms Limited

35

Minerva Fire Defence Limited

Modern Alarms (Scotland) Limited

Modern Alarms Limited

Modern Automatic Alarms Limited

Modern Integrated Systems Limited

Modern Security Systems

Modern Security Systems (IOM) Ltd.

Modern Security Systems (Products) Limited

Monitor Security Systems Limited

Motor Auctions Group Limited, The

Mountwest 81 Limited

Newmans Tubes Limited

Nu-Tron Security Limited

OCYT 1 Limited

OCYT 2 Limited

OCYT 5 Limited

OCYT 6 Limited

ODL Limited

OKD Limited

OMK Limited

Orbis Security Systems Limited

P.M.H. Electronics Limited

Pinacl Communication Systems Limited

Pinacl Limited

Pinacl Whitehall Limited

Pipework Fabrications Limited

Prestaroy Limited

Pritchard Services Group Investments Limited

Progressive Securities Investment Trust Limited

Prospect House Investments Limited

Prospect House No. 5 Limited

Protec Systems Limited

Protection One (UK) plc

Pryor & Howard (1988) Limited

Quad Europe Limited

Quad Systems Holdings Limited

Quad Systems Limited

Raychem HTS Limited

Raychem International Limited (Branch)

Raychem Limited

Realm Security Systems Limited

RegADT Travel Holdings Limited

Regal Alarms & Security Limited

Regal Security Services Limited

Regal Security Systems Limited

Reid Crowther Consulting Limited

Remote Facilities Management Limited

Rhomax Engineering Limited

Rhomax ITS Limited

S.L.S. Engineering Limited

SAFE Limited

36

Sabre Supply Management Limited

Safeguard Electronics Limited

Safety Systems UK Limited

Saffire Alarm Systems Limited

Saffire Extinguishers Limited

Samaritan Integrated Systems Limited

Samaritan Security Systems Limited

Samual Booth & Company

Saranne Packaging Limited

Scott Health & Safety Limited

Secure-It (UK) Limited

Securitag International Limited

Security Centres (Scotland) Limited

Security Centres (UK) Holdings Limited

Security Centres (UK) Limited

Security Centres Holdings International Ltd.

Security Centres Holdings Limited

Security Centres Investments Limited

Security Surveyors Group Plc

Sensormatic (UK) Ltd.

Sensormatic CamEra Ltd.

Sensormatic Commercial/Industrial Ltd.

Sensormatic Finance Ltd.

Sensormatic International Ltd.

Sensormatic Investments Ltd.

Sensormatic Limited

Sensormatic Security Solutions Ltd.

Shepton Holdings Limited

Shield Protection Limited

Show Contracts Limited

Sigmaform (UK) Limited

Sky Signs Limited

Sonitrol Limited

Sound and Vision Technologies Limited

Spector Lumenex Limited

Spensall Engineering Limited

Splendor Cleaning Services Limited

Spraysafe Automatic Sprinklers Limited

Staifix Systems Limited

Standfast Security Systems Limited

Stappard & Howes Limited

Stappard Howes Design Limited

Stappard Howes Projects Limited

Steel Support Systems Limited

Steeplock Limited

Stocks Security Systems Limited

Stretford Security Services Limited

Surveillance and Fire Equipment Limited

Swale Security Systems Limited

TDI Batteries (Europe) Limited

TGN Euro Link Limited

37

TSG Trustees Limited

TVM DIstribution Limited

TVM Group UK Limited

Telecom Security Limited

Telesurveillance Limited

Ten Acre Securities Ltd.

Thorn Security Group Limited

Thorn Security International Limited

Thorn Security Limited

Thorn Security Pension Trustees Limited

Thornfire Limited

Tomorrows Telecom Limited

Total Lift Services Limited

TransAsia (H.K.) Limited

Triangle Controls Ltd.

TyCom Cable Ship Company (UK) Limited

TyCom Contracting (UK) Limited

Tyco Buildings Services Products (UK) Limited

Tyco Electronics Cables Limited

Tyco Electronics Components Limited

Tyco Electronics Holdings Limited

Tyco Electronics Labels Limited

Tyco Electronics Limited

Tyco Electronics UK Ltd.

Tyco Energy (UK) Limited

Tyco Engineered Products (UK) Ltd

Tyco Engineering Services Limited

Tyco European Metal Framing Limited

Tyco European Steel Strip Limited

Tyco European Tubing Limited

Tyco Fire Products Manufacturing Ltd.

Tyco Fire Systems Limited

Tyco Flow Control (UK) Limited

Tyco Healthcare (UK) Commercial Limited

Tyco Healthcare (UK) Manufacturing Limited

Tyco Healthcare (UK) Limited

Tyco Holdings (UK) Limited

Tyco Integrated Systems Limited

Tyco Networks (UK) Limited

Tyco Plastics Limited

Tyco Tech Limited

Tyco Telecommunications (US) Inc.

Tyco Thermal Controls UK Limited

Tyco Tubing Ltd.

Tyco VI

Tyco Valves & Controls Distribution (UK) Limited

Tyco Valves & Controls Gulf Limited

Tyco Valves Limited

Tyne Car Auction Limited

Ultra Security Alarms Limited

Unifast Systems Limited

38

Unirax Limited

Unistrut Europe Ltd.

Unistrut Holdings Ltd.

Unistrut Limited

Vital Communication International Ltd.

W&S Freeman Limited

WM Fire Protection Limited

WM Fire Systems Ltd.

Wares Security Group Limited

West Hyde Developments Limited

Westec Security Limited

Westlock Controls Limited

Whessoe Vapour Control Limited

Whessoe Varec Company, The

White Group Electronics Limited

Wilson Pipe Fittings Limited

Wormald Ansul U.K. Ltd.

Wormald Engineering Limited

Wormald Fire Systems Limited

Wormald Holdings (U.K.) Ltd.

Wormald Industrial Property Ltd.

Zettler Limited

Zodiac Security Systems Limited

United States of America

999 Arques Corp.

A&E Construction Products, Inc.

A&E GP Holding, Inc.

A&E Hangers, Inc.

A&E Holding GP

A&E Products Group LP

A&E Products Group, Inc.

A-G Holding, Inc. I

ADT General Holdings, Inc.

ADT Holdings, Inc.

ADT Investments II, Inc.

ADT Investments, Inc.

ADT Maintenance Services, Inc.

ADT Operations, Inc.

ADT Property Holdings, Inc.

ADT Security Services, Inc.

ADT Security Systems, West, Inc

ADT Services, Inc.

ADT Title Holding Company I

ADT Title Holding Company II

AEPG, Inc.

AFC Cable Systems, Inc.

AFP Property Holding

AMP International Enterprises Limited

AMP Investments, Inc.

AMP Services, Ltd.

39

API Security, Inc.

APS Group Holding, Inc.

ARR, Inc.

ATC Sales Company

AWZ Inc.

Activation Technologies, LLC

Adhesive Technologies, Inc.

Adhesives Holding GP

Advanced Packaging Systems

Alert Centre

Allegheny Corp.

Alliance Integrated Systems, Inc.

Allied Tube & Conduit Corporation

American District Telegraph Company (NJ)

American Electrical Terminal Company, Inc.

Ameritech SecurityLink, Inc.

Anderson, Greenwood & Co.

Ansul, Incorporated

Atcor, Inc.

Auto Suture Company, Australia

Auto Suture Company, Canada

Auto Suture Company, Netherlands

Auto Suture Company, U.K.

Auto Suture Eastern Europe, Inc.

Auto Suture International, Inc.

Auto Suture Norden Co.

Auto Suture Puerto Rico, Inc.

Auto Suture Russia, Inc.

Automated Security Holdings, Inc.

Automatic Fire Systems Ltd.

BWD Property, LLC

Batts Holdings, Inc.

Batts, Inc.

Beta Acquisition Corp.

Burton, Adams, Kemp & King, Inc.

C.S. Charles L. Brown, L.P. (75%)

C.S. Global Link, L.P. (75%)

C.S. Global Mariner, L.P. (55%)

C.S. Global Sentinel, L.P. (55%)

C.S. Long Lines, L.P. (75%)

CASS Water Engineering, Inc.

CCTC International, Inc.

CEM Access Systems, Inc.

CT Corporation System—TN

CV Holding Inc.

CVG Holding Corp.

Carlisle Plastics Holding LLC

Caropure Technology, Inc.

Central CPVC Corporation

Central Castings Corporation

Central Sprinkler Company

40

Central Sprinkler Corporation

Central Sprinkler Holdings, Inc.

Century Tube Corporation

Chagrin H.Q. Venture Ltd. (50%)

Chagrin Highlands Inc.

Chagrin Highlands Ltd. (50%)

Chemgene Corporation

Coated Products GP, Inc.

Coated Products Holdings, Inc.

Confab International, L.P.

Connect 24 Wireless Communications Inc.

Critchley Group, Inc.

Crosby GP Holding, Inc.

Crosby Holding, Inc. I

Crosby Valve International Ltd.

Crosby Valve Sales & Services Corporation

Crosby Valve, Inc.

D.A.S. International, Ltd.

Descote, Inc.

Digital Security Controls, Inc.

Earth Tech (Infrastructure) Inc.

Earth Tech Architecture Inc.

Earth Tech EMS Holdings, Inc.

Earth Tech Environment & Infrastructure Inc.

Earth Tech Holdings TAC, Inc.

Earth Tech Holdings, Inc.

Earth Tech Northeast, Inc.

Earth Tech WE Holding Inc.

Earth Tech Water Engineering LP

Earth Tech of Michigan Inc.

Earth Tech of North Carolina, Inc.

Earth Tech of Ohio Inc.

Earth Tech, Inc.

Earth Technology Corporation (USA), The

Electro Signal Lab, Inc.

Electro-Trace Corporation

Elkay Services LLC

Elo TouchSystems, Inc.

F.A.I. Technology Inc.

FAI Tech Link Inc.

FAI Technology (Holding), Inc.

FCI Liquidations, Inc.

FRM Services, Inc.

Figgie Leasing Corporation

Fire Products GP Holding, Inc.

Fire Products Holding GPS

First Lafayette Holdings, Inc.

Firth Cleveland Steels, Inc.

Fisk Corporation

Fisk Electric Holdings, Inc.

Forever Hangers, Inc.

41

GC Holding, Inc. I

GC Holdings, Inc.

GF&S Inc.

GFS Holding

General Sub Acquisition Corp.

General Surgical Holdings, Inc.

General Surgical Innovations, Inc.

Georgia Packaging, Inc.

Georgia Pipe Company

Glynwed Holdings, Inc.

Goyen Valve Corporation

Graphic Holdings, Inc.

Grinnell Building Services Corporation

Grinnell Corporation

IMB, A Simplex Company, L.L.C.

IMC Exploration Company

Image Scan, Inc.

Infrasonics Technologies, Inc.

InnerDyne Holdings, Inc.

InnerDyne, Inc.

Interamics (95%)

International Financing, Inc.

International Quality and Environmental Services, LLC

J. Muller International (USA)

J.B. & S. Lees Inc.

J.R. Clarkson Company, The

J.R. Clarkson Holdings, Inc.

JMI Engineers, Inc.

KHPC Holding GP

Keystone France Holdings Corp.

Keystone Germany Holdings Corp.

Keystone Kuwait, Inc.

Keystone Saudi, Inc.

King Packaging Co., Inc.

LCP Holding

LCP, Inc.

Lafayette Pharmaceuticals, Incorporated

Laser Diode Holdings, Inc.

Laser Diode Incorporated

Liebel-Flarsheim Company

Life Design Systems, Inc.

Ludlow Coated Products LP

Ludlow Company LP, The

Ludlow Corporation

Ludlow Jute Company Limited

Ludlow Services LLC

Ludlow Technical Products Corporation

M/A-COM Puerto Rico, Inc.

M/A-COM Tech Holdings, Inc.

M/A-COM, INC.

MCS Communication Products Inc.

42

MMHC, Inc.

MMI, LLC

MSCH Company

Madison Equipment Co., Inc.

Mallinckrodt Athlone Holdings, Inc.

Mallinckrodt Baker International, Inc.

Mallinckrodt Baker, Inc.

Mallinckrodt Caribe, Inc.

Mallinckrodt Holdings, Inc.

Mallinckrodt Holdings, LLC

Mallinckrodt Inc. (Delaware)

Mallinckrodt Inc. (New York)

Mallinckrodt International Corporation

Mallinckrodt Medical PMC

Mallinckrodt Respiratory Acquisition I, Inc.

Mallinckrodt TMH

Mallinckrodt Veterinary, Inc.

Management Association of M/A-COM, Inc., The

Master Protection Corporation

Master Protection Holdings, Inc.

Merrimack Valley Food Bank, Inc.

Mobile Security Communications, Inc. (19%)

Mode Plastics, Inc.

Municipal Emergency Holdings, Inc.

Municipal Emergency Services, Inc.

National Alarm Computer Center, Inc.

National Catheter Corporation

National Integration Services, Inc.

National Tape Corporation

National Tape Holdings, Inc.

Nellcor Puritan Bennett Export Inc.

Nellcor Puritan Bennett Incorporated

Nellcor Puritan Bennett International Corporation

PI Holding

PTB Acquisition Sub, Inc.

PTB Holdings, Inc.

PTB International, Inc.

Palomar Precision Tubes, Inc.

Paragon Trade Brands (Canada) Inc.

Paragon Trade Brands, Inc.

Paul Scott Security Systems, Inc.

Paul Scott Security Systems, LLC

Pinacl Communications, Inc.

Plastics Holding Corporation

Polyken Technologies Europe, Inc.

Power Systems Holdings, Inc.

Precision Interconnect, Inc.

Primary Display Corporation

Printed Circuits, Inc.

Private Products, Inc.

Professional Registrar Organization, Inc.

43

Puritan-Bennett Corporation

R1 Mergersub, Inc.

RI Corporation

RS Holdings LLC

Raychem (Delaware) Ltd.

Raychem Corporation of Arizona

Raychem Foundation

Raychem Gulf Coast, Inc.

Raychem International Corporation

Raychem International Manufacturing Corporation

Raychem Radiation Technologies, Inc.

Raychem Ventures, Inc.

Rayshrink Corporation

Raythene Systems Corporation

Remtek International, Inc.

Robinson Services, Inc.

Rochester Corporation, The

S2 Mergersub Inc.

STI Licensing Corporation

STI Properties, Inc.

STI Properties, Ltd.

STI Risk Management Co. (85%)

STR Grinnell GP Holding, Inc.

STR Realty Holdings LLC

SWD Holding, Inc.

SWD Holding, Inc. I

Safe Link Corporation

Sakertrax, Inc.

Scott Technologies Foundation

Scott Technologies Holdings, Inc.

Scott Technologies, Inc.

SecurityLink of Puerto Rico, Inc.

Senelco Iberia, Inc.

Sensormatic Asia/Pacific, Inc.

Sensormatic Distribution, Inc.

Sensormatic Electronics Corporation

Sensormatic Electronics Corporation (Puerto Rico)

Sensormatic Holding Corporation

Sensormatic International Holdings I, Inc.

Sensormatic International Holdings II, Inc.

Sensormatic International, Inc.

Sensormatic Technology, Inc.

Sensormatic del Caribe, Inc. (Puerto Rico)

Sherwood Medical Company

Sherwood Medical Company I

Sherwood-Accurate Inc.

Sigma Circuits, Inc.

Sigma GP Holding, Inc.

Sigma Holding Corp.

Sigma Printed Circuits Holding Corp.

Sigmaform Pacific Sales Corporation (Sing Branch)

44

Simplex Argentina, L.L.C.

Simplex Asia Holding, L.L.C.

Simplex Asia, I Inc.

Simplex Asia, L.L.C.

Simplex Beijing Holding, L.L.C.

Simplex Europe, L.L.C.

Simplex India, L.L.C.

Simplex Malaysia, L.L.C.

Simplex Mexico, L.L.C.

Simplex Singapore, L.L.C.

Simplex Sino Holding, L.L.C.

Simplex South Africa, L.L.C.

Simplex Thailand, L.L.C.

Simplex Time Recorder Co.

SimplexGrinnell Holdings, Inc.

SimplexGrinnell LP

Smith Alarm Systems, Inc.

Star Holding Inc.

Star Sprinkler, Inc.

Starion Instruments Corp.

Sunbelt Holding LLC

Sunbelt Holding, Inc. I

Sunbelt Holdings, Inc.

Sunbelt Manufacturing, Inc.

Surgical Service Corporation

T.J. Cope Inc.

T15 Acquisition Corp.

TA, Inc.

TAMS Architects & Engineers, Inc.

TAMS Consultants, Inc.

TKC Holding Corp.

TKN, Inc.

TME Management Corp.

TPA Realty Holding Corp.

TPCG Holding GP

TSSL Holding Corp.

TV&C GP Holding, Inc.

TVC Holding

TVC, Inc.

Talisman Partners, Ltd.

Techcon International Ltd.

Telestate International, Inc.

Terraworx Inc.

Thermacon, Inc.

Tracer Construction Company

Tracer Field Services, Inc.

Tracer Industries Finance Co., Inc.

Tracer Industries Holdings, Inc.

Tracer Industries International, Inc.

Tracer Industries Management Co., Inc.

Tracer Industries, Inc.

45

Tracer Licensing, L.P.

Transoceanic Cable Ship Company, Inc.

Transpower Technologies, Inc.

Tri-Ed Distribution Inc.

Tri-Systems, Inc.

TyCom (US) Holdings, Inc.

TyCom Acquisition Co. I, Inc.

TyCom Finance Company, Inc.

TyCom Management Inc.

TyCom Simplex Holdings Inc.

Tyco (US) Holdings, Inc.

Tyco AR Funding 2002 LLC

Tyco Acquisition Alpha LLC

Tyco Acquisition Corp. 26

Tyco Acquisition Corp. 27

Tyco Acquisition Corp. 28

Tyco Acquisition Corp. 29

Tyco Acquisition Corp. 30

Tyco Acquisition Corp. 33

Tyco Acquisition Corp. 35

Tyco Acquisition Corp. 39

Tyco Acquisition Corp. 40

Tyco Acquisition Corp. 41

Tyco Acquisition Corp. 42

Tyco Acquisition Corp. 43

Tyco Acquisition Corp. 44

Tyco Acquisition Corp. 45

Tyco Acquisition Corp. XII

Tyco Acquisition Corp. XIV

Tyco Acquisition Corp. XXI

Tyco Acquisition Corp. XXII (NV)

Tyco Acquisition Corp. XXV (NV)

Tyco Acquisition Delta LLC

Tyco Acquisition Epsilon LLC

Tyco Acquisition Gamma LLC

Tyco Adhesives GP Holding, Inc.

Tyco Adhesives LP

Tyco Adhesives, Inc.

Tyco Capital Investments, Inc.

Tyco Electronics Components Limited

Tyco Electronics Corporation

Tyco Electronics Installation Services, Inc.

Tyco Electronics Power Systems, Inc.

Tyco Electronics Puerto Rico Inc.

Tyco Finance Corp.

Tyco Fire & Security LLC

Tyco Fire (NV) Inc.

Tyco Fire Products LP

Tyco Flow Control Company LLC

Tyco Flow Control, Inc.

Tyco Healthcare Group LP

46

Tyco Healthcare Holdings, Inc.

Tyco Healthcare Retail Group GPS

Tyco Healthcare Retail Group, Inc.

Tyco Healthcare Services LLC

Tyco Holding Corp.

Tyco Holdings of Nevada, Inc.

Tyco Holdings, Inc.

Tyco Integrated Cable Systems, Inc.

Tyco International (NV) Inc.

Tyco International (PA) Inc.

Tyco International (US) Inc.

Tyco International (US) Inc. Employment Transition Benefits Trust, The

Tyco International Asia, Inc.

Tyco Merger Sub (NJ) Inc.

Tyco Networks (Solutions) Inc.

Tyco Plastics LP

Tyco Printed Circuit Group LP

Tyco RFC 2002 LLC

Tyco Receivables Corp.

Tyco Receivables Funding LLC

Tyco SPC, Inc.

Tyco Safety Products US, Inc.

Tyco Sailing, Inc.

Tyco Submarine Systems Projects, Inc.

Tyco Technology Resources, Inc.

Tyco Telecom OSP Holding Corp.

Tyco Telecommunications (US) Inc.

Tyco Thermal Controls LLC

Tyco Valves & Controls—Puerto Rico Corporation

Tyco Valves & Controls LP

Tyco Valves & Controls, Inc.

Tyco Valves and Controls Middle East, Inc.

Tyco Valves and Controls U.A.E., Inc.

Tyco Worldwide Services, Inc.

U.S.S.C. Puerto Rico, Inc.

USS Acquisition Corp.

USSC Acquisition Corporation

USSC Cal Med, Inc.

USSC Financial Services Inc.

USSC Tex Med, Inc.

Unistrut Corporation

United States Construction Co.

United States Surgical Corporation

Valleylab Holding Corporation

Valleylab Inc

W.A.F. Group, Inc.

WPFY, Inc.

Water & Power Technologies of Texas, Inc.

Water Holdings Corp.

Water and Power Technologies, Inc.

Westec Business Security, Inc.

47

Westlock Controls Corporation

Westlock Controls Holdings, Inc.

Whitaker Corporation, The

White Mountain Insurance Company

Willoughby Holdings Inc.

Wormald Americas, Inc.

Yarway Corporation

Uruguay

ADT Security Services S.A.

Knogo Latin America S.A.

Raychem Uruguay S.A.

Tyco Flow Control del Uruguay S.A.

Venezuela

Aguas Industriales de Jose, C.A. (75%)

Ansul de Venezuela C.A.

CAENF Investments

Earth Tech Venezuela, C.A.

Grinnell Sistemas de Proteccion Contra Incendio S.A. (Venezuela)

Grupo Rust International Di Venezuela C.A.

Kendall de Venezuela, C.A.

Tyco Electronics de Venezuela, C.A.

Tyco Flow Control de Venezuela, CA

Tyco Submarine Systems, C.A.

Vietnam

Tyco Engineering (Vietnam) Ltd.

Tyco Fire, Security & Services Pte Ltd—Representative Office Hanoi

48

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Tyco International, Ltd. Subsidiaries at September 30, 2004

EX-23.1

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EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the incorporation by reference in the Registration Statements on Forms S-3 (File Nos. 333-21425, 333-44102, 333-49662, 333-51548, 333-57180, 333-57180-01, 333-68508, 333-68508-01, 333-73223, 333-83087 and 333-104488) and on Forms S-8 (File Nos. 333-33999, 333-34001, 333-48476, 333-54692, 333-62496, 333-69323, 333-74397, 333-75037, 333-75713, 333-80391, 333-90345, 333-93261, 333-95595, 333-107488, 333-107489 and 333-113943) of Tyco International Ltd. and subsidiaries of our report dated December 13, 2004, relating to the consolidated financial statements and financial statement schedule as of and for the year ended September 30, 2004, which appears in this Annual Report on Form 10-K.

/s/  DELOITTE & TOUCHE LLP

Deloitte & Touche LLP
New York, New York
December 13, 2004

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EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-23.2

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EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the incorporation by reference in the Registration Statements on Forms S-3 (File Nos. 333-21425, 333-44102, 333-49662, 333-51548, 333-57180, 333-57180-01, 333-68508, 333-68508-01, 333-73223, 333-83087 and 333-104488) and on Forms S-8 (File Nos. 333-33999, 333-34001, 333-48476, 333-54692, 333-62496, 333-69323, 333-74397, 333-75037, 333-75713, 333-80391, 333-90345, 333-93261, 333-95595, 333-107488, 333-107489 and 333-113943) of Tyco International Ltd. of our report dated November 4, 2003, except as to the amounts impacted by discontinued operations as disclosed in Note 4 for which the date is December 10, 2004, relating to the consolidated financial statements and financial statement schedule as of and for each of the two years in the period ended September 30, 2003, which appears in this Form 10-K.

/s/  PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

New York, New York
December 13, 2004

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EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-24.1

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Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

        That each person whose signature appears below, as a Director of Tyco International Ltd. (the "Company"), a Bermuda company with its general Offices at Second Floor, 90 Pitts Bay Road, Pembroke, HM 08, Bermuda, does hereby make, constitute and appoint Edward D. Breen, David J. FitzPatrick, William B. Lytton, or any one of them acting alone, his or her true and lawful attorneys, with full power of substitution and resubstitution, in his or her name, place and stead, in any and all capacities, to execute and sign the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2004, and any and all amendments thereto, and documents in connection therewith, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, giving and granting unto said attorneys full power and authority to do and perform such actions as fully as they might have done or could do if personally present and executing any of said documents.

        Dated and effective as of the 10th of December 2004.

/s/  EDWARD D. BREEN Edward D. Breen, Chairman	/s/  H. CARL MCCALL H. Carl McCall, Director
/s/  DENNIS C. BLAIR Adm. Dennis C. Blair, Director	/s/  MACKEY J. MCDONALD Mackey J. McDonald, Director
/s/  GEORGE W. BUCKLEY George W. Buckley, Director	/s/  DR. BRENDAN R. O'NEILL Dr. Brendan R. O'Neill, Director
/s/  BRIAN DUPERREAULT Brian Duperreault, Director	/s/  SANDRA S. WIJNBERG Sandra S. Wijnberg, Director
/s/  BRUCE S. GORDON Bruce S. Gordon, Director	/s/  JEROME B. YORK Jerome B. York, Director
/s/  JOHN A. KROL John A. Krol, Director

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Exhibit 24.1

POWER OF ATTORNEY

EX-31.1

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Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Edward D. Breen, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Tyco International Ltd.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

[Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986]

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 13, 2004

/s/  EDWARD D. BREEN Edward D. Breen
Chief Executive Officer

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Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

EX-31.2

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Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, David J. FitzPatrick, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Tyco International Ltd.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

[Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986]

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 13, 2004

/s/  DAVID J. FITZPATRICK

David J. FitzPatrick
Chief Financial Officer

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Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

EX-32.1

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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
TYCO INTERNATIONAL LTD.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        The undersigned officers of Tyco International Ltd. (the "Company") hereby certify to their knowledge that the Company's annual report on Form 10-K for the period ended September 30, 2004 (the "Report"), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  EDWARD D. BREEN Edward D. Breen
Chief Executive Officer
December 13, 2004

/s/  DAVID J. FITZPATRICK David J. FitzPatrick
Chief Financial Officer
December 13, 2004

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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 TYCO INTERNATIONAL LTD. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002