The following discussion and analysis of the Company's financial condition and results of operations should be read together with our Consolidated Financial Statements and the related notes included in this Quarterly Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The Company's 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 unaudited Consolidated Financial Statements include the consolidated results of Tyco International Ltd., a company organized under the laws of Switzerland, and its subsidiaries (hereinafter collectively referred to as "we," the "Company" or "Tyco") and have been prepared in United States dollars, in accordance with accounting principles generally accepted in the United States ("GAAP").

The Company operates in the following business segments:

º •
º ADT Worldwide designs, sells, installs, services and monitors electronic security systems for residential, commercial, industrial and governmental customers.

º •
º Flow Control designs, manufactures, sells and services valves, pipes, fittings, valve automation and heat tracing products for the water and wastewater markets, the oil, gas and other energy markets along with general process industries.

º •
º Fire Protection Services designs, sells, installs and services fire detection and fire suppression systems for commercial, industrial and governmental customers.

º •
º Electrical and Metal Products designs, manufactures and sells galvanized steel tubing, armored wire and cable and other metal products for non-residential construction, electrical, fire and safety and mechanical customers.

º •
º Safety Products designs, manufactures and sells fire protection, security and life safety products, including fire suppression products, breathing apparatus, intrusion security, access control and video management systems. In addition, Safety Products manufactures products installed and serviced by ADT Worldwide and Fire Protection Services.

We also provide general corporate services to our segments and these costs are reported as Corporate and Other.

References to the segment data are to the Company's continuing operations. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company has realigned certain business operations as of September 27, 2008, which resulted in certain prior period segment amounts being recast. See Note 14.

Overview and Outlook

Primarily as a result of changes in foreign currencies and volume decreases in our Electrical and Metal Products business, net revenue for the quarter ended June 26, 2009 decreased $975 million from $5.2 billion for the comparable period ended June 27, 2008 to $4.2 billion in the quarter ended June 26, 2009. Net revenue for the nine months ended June 26, 2009 decreased $2.1 billion from $14.9 billion for the comparable period ended June 27, 2008 to $12.8 billion in the quarter ended June 26, 2009. The significant appreciation of the U.S. dollar against most major currencies for the quarter and nine months ended June 26, 2009 over the comparable periods ended June 27, 2008 negatively impacted our revenue by $407 million and $1.3 billion, respectively, as nearly 50% of our

revenue is generated outside of the United States. If the U.S. dollar appreciates against the currencies to which we have significant exposure, our reported net revenue can be expected to be adversely affected.

All of our reportable segments experienced declines in operating income for both the quarter and nine months ended June 26, 2009. On a consolidated basis, operating income for the quarter and nine months ended June 26, 2009 declined $238 million to $339 million and $3.3 billion to $(1.8) billion, respectively, primarily as a result of lower sales volume of steel products at our Electrical and Metal Products segment. The operating loss included goodwill and intangible asset impairments of $2.7 billion for the nine months ended June 26, 2009. The decrease included restructuring, asset impairment and divestiture charges, net of $37 million for the quarter ended June 26, 2009. Additionally, in the quarter ended June 26, 2009 management estimates that $10 million of additional charges were incurred resulting from restructuring actions. The nine months ended June 26, 2009 included legacy legal settlement charges of $110 million as well as restructuring, asset impairment and divestiture charges, net of $147 million. Additionally, in the nine months ended June 26, 2009 management estimates that $14 million of additional charges were incurred resulting from restructuring actions. Additionally, the quarter and nine months ended June 26, 2009, were negatively impacted by $35 million and $43 million, respectively, due to unfavorable changes in foreign currency exchange rates.

In response to the economic downturn, cost containment actions have been initiated across all of our businesses and corporate. We are also pursuing cost savings through restructuring activities in fiscal 2009 and expect to incur restructuring and restructuring related charges of approximately $200 million in fiscal 2009, of which $34 million and $142 million was incurred during the quarter and nine months ended June 26, 2009, respectively. Additionally, management estimates that $10 million and $14 million of additional charges were incurred resulting from these restructuring actions during the quarter and nine months ended June 26, 2009, respectively. We believe these restructuring activities will strengthen our competitive position over the long term.

We expect to continue our initiatives to improve our efficiency, manage our working capital effectively and prudently allocate our capital. We expect internal investments to fund growth and productivity in our businesses to continue to be our first priority. As in prior years, we expect to remain active in making bolt-on acquisitions as we continually assess the strategic fit and value of businesses that have potential for success within our existing framework. For example, during the nine months ended June 26, 2009, the Company's Safety Products segment acquired Vue Technology, Inc., a provider of radio frequency identification (RFID) technology, for $43 million to strengthen the technology portfolio offered to retailers.

Goodwill and Intangible Asset Impairments

During the second quarter of 2009, the Company had concluded that its EMEA Security and EMEA Fire reporting units within the ADT Worldwide and Fire Protection Services segments, respectively, Electrical and Metal Products reporting unit within the Electrical and Metal Products segment and ACVS, Life Safety and SRS reporting units within the Safety Products segment experienced triggering events such that the carrying values of these reporting units likely exceeded their fair values. As a result of the triggering events, the Company performed long-lived asset, goodwill and intangible asset impairment tests for these reporting units and certain of the Company's tradenames and franchise rights. The results of the goodwill impairment tests indicated that the implied goodwill amount was less than the carrying amount of goodwill for each of the aforementioned reporting units. The Company recorded an aggregate non-cash impairment charge of $2.6 billion ($2.6 billion after-tax) during the second quarter of 2009. The non-cash impairment charge was recorded in goodwill and intangible asset impairments in the Company's Consolidated Statement of Operations for the quarter ended March 27, 2009.

Also, during the second quarter of 2009, the Company's estimates of future cash flows used in determining the fair value of its Safety Products Sensormatic tradename as well as ADT Worldwide franchise rights relating to Winner and SSC were revised downward relative to the estimates used in the Company's tests during the fourth quarter of 2008. The results of the impairment test indicated that the Safety Products Sensormatic tradename and ADT Worldwide Winner and SSC franchise rights estimated fair values were less than their respective carrying amounts. As a result, the Company recorded an aggregate non-cash impairment charge of $64 million ($40 million after-tax) during the second quarter of 2009. The non-cash impairment charge was recorded in goodwill and intangible asset impairments in the Company's Consolidated Statement of Operations for the quarter ended March 27, 2009.

Legal Settlements

In the first half of fiscal 2009, the Company settled a number of legal matters stemming from alleged violations of federal securities laws committed by former senior management, including three lawsuits from plaintiffs that had opted out of the June 2007 class action settlement, for an aggregate amount of approximately $90 million. Pursuant to the Separation and Distribution Agreement, the Company's share of this amount is approximately $24 million, with Covidien and Tyco Electronics responsible for approximately $38 million and $28 million, respectively.

During the second quarter of 2009, the Company concluded that its best estimate of probable loss for its unresolved legacy securities matters was $375 million. Due to the fact that any payments ultimately made in connection with these matters would be subject to the sharing provisions of the Separation and Distribution Agreement, the Company also recorded receivables from Covidien and Tyco Electronics in the amounts of $158 million and $116 million. As a result, the Company recorded a charge of $101 million during the quarter ended March 27, 2009 in selling, general, and administrative expenses related to these unresolved matters.

During the quarter ended June 26, 2009, the Company agreed to settle with an additional five plaintiffs that had opted-out of the class action settlement as well as the ERISA related claim for a total of $269 million. Pursuant to the Separation and Distribution Agreement, the Company's share of the settlement amount was approximately $73 million, with Covidien and Tyco Electronics responsible for approximately $112 million and $84 million, respectively. This settlement activity did not result in the Company recording a charge to its Consolidated Statement of Operations for the quarter ended June 26, 2009 as the Company had established a reserve for its best estimate of the amount of loss during the second quarter of 2009 as discussed above. The Company continues to believe that the accrual remaining at June 26, 2009 is its best estimate for the remaining unresolved claims. Although the Company has reserved its best estimate of probable loss, related to unresolved legacy securities claims, their ultimate resolution could differ from the estimate which could have a material adverse effect on the Company's financial position, results of operations or cash flows.

Results of Operations:

                                  For the Quarter Ended         For the Nine Months Ended
                                 June 26,        June 27,       June 26,         June 27,
                                   2009            2008           2009             2008
Revenue from product sales      $     2,541     $     3,413    $      7,827     $      9,617
Service revenue                       1,699           1,802           4,989            5,298

Net revenue                     $     4,240     $     5,215    $     12,816     $     14,915

Operating income (loss)         $       339     $       577    $     (1,802 )   $      1,512
Interest income                           9              16              32               99
Interest expense                        (74 )           (91 )          (225 )           (323 )
Other income, net                         1            (257 )            12             (205 )

Income (loss) from
continuing operations before
income taxes and minority
interest                                275             245          (1,983 )          1,083
Income taxes                            (31 )           (45 )           (55 )           (249 )
Minority interest                        (1 )            (1 )            (2 )             (3 )

Income (loss) from
continuing operations                   243             199          (2,040 )            831
Income from discontinued
operations, net of income
taxes                                    44             277              37              288

Net income (loss)               $       287     $       476    $     (2,003 )   $      1,119

Net revenue decreased $975 million, or 18.7%, for the third quarter and $2.1 billion, or 14.1%, for the first nine months of 2009 as compared to the same periods last year. The decreases in both periods are primarily driven by changes in foreign currency exchange rates, which negatively affected the quarter and nine months ended June 26, 2009 by $407 million and $1.3 billion, respectively. The remaining decrease in revenue was driven primarily by lower volume of steel products in our Electrical and Metal Products segment and weakness in commercial markets, including the retailer end market, which negatively impacted our ADT Worldwide and Safety Products segments. Revenues were positively affected by $32 million and $128 million for acquisitions and divestitures, primarily in our ADT Worldwide segment for the quarter and nine months ended June 26, 2009, respectively.

Operating income decreased $238 million to $339 million for the quarter ended June 26, 2009. Operating income decreased $3.3 billion to $(1.8) billion for the nine months ended June 26, 2009. The operating loss included an aggregate goodwill impairment charge of $2.6 billion relating to reporting units in our Electrical and Metal Products, ADT Worldwide, Fire Protection Services and Safety Products segments and intangible asset impairment charges of $64 million relating to assets at our ADT Worldwide and Safety Products segments for the nine months ended June 26, 2009. Additionally, lower volumes primarily in our Electrical and Metal Products and Safety Products segments negatively impacted operating income. The decrease included restructuring, asset impairment and divestiture charges, net of $37 million for the quarter ended June 26, 2009. Additionally, management estimates that $10 million of additional charges resulting from restructuring actions were incurred during the quarter ended June 26, 2009. The nine months ended June 26, 2009 included legacy legal settlement charges of $110 million as well as restructuring, asset impairment and divestiture charges, net of $147 million. Additionally, management estimates that $14 million of additional charges resulting from restructuring actions were incurred during the nine months ended June 26, 2009. Operating income for the quarter ended June 27, 2008 included restructuring, asset impairment and divestiture charges, net of $53 million and a legacy legal settlement charge of $9 million, offset by a credit of $7 million for class action recoveries. The nine months ended June 27, 2008 included Separation related costs of $5 million, restructuring, asset impairment and divestiture charges, net of $110 million and a legacy settlement charge of $29 million, offset by a credit of $7 million for class action settlement recoveries. Changes in foreign currency exchange rates negatively affected operating income by $35 million and $43 million for the quarter and nine months ended June 26, 2009.

Quarter Ended June 26, 2009 Compared to Quarter Ended June 27, 2008

     ADT Worldwide

    Net revenue, operating income and operating margin for ADT Worldwide were as
follows ($ in millions):

                                              For the Quarter Ended
                                             June 26,        June 27,
                                               2009            2008
              Revenue from product sales    $       524     $       666
              Service revenue                     1,206           1,261

              Net revenue                   $     1,730     $     1,927

              Operating income                      233             237
              Operating margin                     13.5 %          12.3 %

Net revenue by geographic area for ADT Worldwide was as follows ($ in millions):

                                                    For the Quarter Ended
                                                   June 26,        June 27,
                                                     2009            2008
       North America                              $     1,032     $     1,042
       Europe, Middle East and Africa ("EMEA")            451             595
       Rest of World                                      247             290

                                                  $     1,730     $     1,927

Net revenue for ADT Worldwide decreased $197 million, or 10.2%, during the quarter ended June 26, 2009, as compared to the quarter ended June 27, 2008. This decrease was primarily driven by the unfavorable impact of changes in foreign currency exchange rates of $149 million. Revenue was positively affected by $48 million for the net impact of acquisitions and divestitures. Revenue from product sales decreased 21.3% and service revenue decreased 4.4%. Revenue from product sales includes sales and installation of electronic security and other systems. Service revenue is comprised of electronic security services and maintenance, including the monitoring of burglar alarms, fire alarms and other life safety systems as well as services related to retailer anti-theft systems. Approximately 56% of ADT's total net revenue is contractual and is considered recurring revenue. Recurring revenue declined 3.0% during the third quarter of 2009, as a result of changes in foreign currency exchange rates which unfavorably impacted recurring revenue by 7.3%, while systems installation and service revenue declined 18.0%. Geographically, revenue in EMEA decreased $144 million, or 24.2%, largely as a result of foreign currency exchange rates, which had an unfavorable impact of $87 million. The remaining decrease in EMEA was primarily a result of a decline in systems installations and service revenue due to continued weakness in the commercial market, including the retailer end market primarily across the United Kingdom and Continental Europe. Revenue declined $43 million, or 14.8% in the Rest of World geographies, which was primarily due to the unfavorable impact of changes in foreign currency exchange rates of $52 million. Revenue in North America declined $10 million, or 1%, largely as a result of reduced spending in the commercial and retailer end markets, partially offset by acquisition activity as well as an increase in revenue in our residential business.

Attrition rates for customers in our ADT Worldwide business decreased to 13.4% on a trailing 12-month basis as of June 26, 2009, as compared to 13.6% as of March 27, 2009. The decrease in attrition was primarily driven by improvements within our U.S. Commercial businesses. Attrition rates increased to 13.4% on a trailing 12-month basis as of June 26, 2009, as compared to 12.7% as of June 27, 2008. The increased attrition was primarily due to adverse market conditions in the U.S., United Kingdom and Continental Europe.

Operating income decreased $4 million in the quarter ended June 26, 2009 from the same period in the prior year. This decrease was primarily driven by the unfavorable impact of changes in foreign currency exchange rates of $11 million. Operating income was also negatively impacted by lower sales volume and increased bad debt charges, primarily resulting from continued weakness in the retail and commercial markets due to adverse global economic conditions. Partially offsetting the decline in operating income was a decrease in restructuring charges as compared to the comparable prior period. We incurred restructuring charges of $12 million included in the quarter ended June 26, 2009 as compared to $30 million included in the quarter ended June 27, 2008. Additionally, the decline in operating income was partially offset by savings realized through cost containment and restructuring actions.

     Flow Control

    Net revenue, operating income and operating margin for Flow Control were as
follows ($ in millions):

                                              For the Quarter Ended
                                             June 26,       June 27,
                                               2009           2008
               Revenue from product sales    $     884     $     1,065
               Service revenue                      70              67

               Net revenue                   $     954     $     1,132

               Operating income              $     122     $       152
               Operating margin                   12.8 %          13.4 %

Net revenue for Flow Control decreased $178 million, or 15.7%, in the quarter ended June 26, 2009 compared to the quarter ended June 27, 2008. The decrease in net revenue was primarily driven by the unfavorable impact of changes in foreign currency exchange rates of $132 million. Revenue also decreased due to reduced project activity in the energy end market of the thermal controls business as well as reduced volume in the water business. The decrease in revenue was partially offset by an increase in the valves business primarily from the energy end market in EMEA. The net impact of acquisitions and divestitures negatively impacted net revenue by $3 million in the quarter ended June 26, 2009 and favorably impacted net revenue by $5 million in prior year.

The decrease in operating income of $30 million in the quarter ended June 26, 2009, as compared to the same period in the prior year, was primarily due to the unfavorable impact of changes in foreign currency exchange rates of $18 million as well as decreased volume in the thermal and water businesses offset by margin improvements in the valves business. Margins were negatively impacted by restructuring and divestiture charges of $5 million. Additionally, management estimates that $4 million of additional charges resulting from restructuring actions were incurred during the quarter ended June 26, 2009. The same period in the prior year included net restructuring charges of $3 million.

     Fire Protection Services

    Net revenue, operating income and operating margin for Fire Protection
Services were as follows ($ in millions):

                                              For the Quarter Ended
                                           June 26,         June 27,
                                             2009             2008
             Revenue from product sales     $     438       $       526
             Service revenue                      418               466

             Net revenue                    $     856       $       992

             Operating income                      67                99
             Operating margin                     7.8 %            10.0 %

Net revenue for Fire Protection Services decreased $136 million, or 13.7%, during the quarter ended June 26, 2009 compared to the quarter ended June 27, 2008. This decrease was primarily due to the impact of unfavorable changes in foreign currency exchange rates of $80 million. Additionally, revenue declined due to the continued weakness in the commercial market and current adverse global economic conditions. Revenue from product sales includes sales and installation of fire protection and other systems. Service revenue consists of inspection, maintenance, service and monitoring of fire detection and suppression systems. Geographically, revenue in our international fire businesses decreased by $88 million largely due to the impact of unfavorable changes in foreign currency exchange rates discussed above as well as the continued weakness in the European commercial markets, partially offset by growth in service work. Additionally, revenue in our North America SimplexGrinnell business decreased by $48 million primarily due to a decline in systems installation and upgrade activity in the sprinkler business.

Operating income decreased $32 million in the quarter ended June 26, 2009 as compared to the same period in the prior year. The decrease was primarily driven by the decline in sales volume discussed above as well as an increase in bad debt charges, both as a result of the weakness experienced in the commercial markets and the current adverse global economic conditions. The decrease was also driven by restructuring charges of $3 million in the quarter ended June 26, 2009 as compared to $1 million in the quarter ended June 27, 2008. Additionally, operating income decreased due to the unfavorable impact of changes in foreign currency exchange rates of $3 million. The decline in operating income was partially offset by savings realized through cost containment actions.

     Electrical and Metal Products

    Net revenue, operating income and operating margin for Electrical and Metal
Products were as follows ($ in millions):

                                              For the Quarter Ended
                                             June 26,        June 27,
                                               2009            2008
               Revenue from product sales    $     319       $     650
               Service revenue                       1               2

               Net revenue                   $     320       $     652

               Operating (loss) income             (17 )           141
               Operating margin                   (5.3 )%         21.6 %

Net revenue for Electrical and Metal Products decreased $332 million, or 50.9%, in the quarter ended June 26, 2009 compared to the quarter ended June 27, 2008. The decrease in revenue was primarily due to lower volume and selling prices of steel products largely resulting from a decline in the commercial market in North America. Revenue also decreased to a lesser extent from lower selling prices and volume for armored cable products. Changes in foreign currency exchange rates had an unfavorable impact of $13 million.

Operating income decreased $158 million in the quarter ended June 26, 2009 as compared to the same period in the prior year. The decrease in operating income related to volume declines as well as lower spreads for steel products. Spreads for steel products continued to decline as a direct result of higher raw material costs. The third quarter of 2009 included restructuring and divestiture charges of $9 million. Additionally, management estimates that $1 million of additional charges resulting from restructuring actions were incurred during the quarter ended June 26, 2009. The same period in the prior year included restructuring and asset impairment charges of $5 million.

. . .