S&P: Tyco unaffected

Standard & Poor's said Tyco International Ltd.'s (BBB/positive/A-2) announcement that it had net income from operations of $923 million in the fiscal third quarter ended June 30, compared to $567 million in the year-earlier period, cash flow from operations of $1.1 billion in the quarter and reduced debt by $631 million on a gross basis and $1.5 billion on a net debt basis has no immediate impact on its ratings or outlook.

In all, the financial results for the June 2004 quarter are considered favorable to credit quality and consistent with S&P's expectations for additional near- to intermediate-term improvement to credit protection measures.

Of particular note was margin strength in health care, improving fundamentals in engineered products and profitability within the safety products and worldwide security operations in the fire and security division, S&P said.

Incorporating its assumption of up to $4 billion in potential funding of contingent liabilities, S&P continues to expect funds from operations to total debt in the 30% to 35% area and total debt to EBITDA to decline to less than 2.5x.

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