Tyco went from a $9.2B fraud-era loss to $2.9B profit after Breen cleaned house

Tyco lost $9.18 billion in fiscal 2002 after its CEO Dennis Kozlowski was ousted amid fraud charges, and it faced about $11 billion of debt. New chief executive Ed Breen, hired in July 2002, replaced the board, dismissed most senior corporate managers and installed strict budgeting, audit and strategy processes.

The cleanup produced a fast recovery. Fiscal 2003 net income was $980 million and fiscal 2004 net income reached $2,879 million, with income from continuing operations of $3,005 million versus a $2,851 million loss from continuing operations in 2002, according to Tyco's 10-K.

By December 2004, TIME reported Tyco had generated $4.8 billion in cash and $2.9 billion in profits in the fiscal year while cutting debt by $4.4 billion, and its stock was up 25 percent for the year — its first solidly profitable year since the scandal.

Net income swung from a $9.18B loss (FY2002) to $2.88B (FY2004); FY2004 generated $4.8B in cash and cut debt by $4.4B, per TIME.

Replacing the whole board and top management removed the credibility drag of the scandal.

Rebuilt audit and budgeting discipline made reported numbers believable again.

Cutting debt before expanding gave the recovery a durable balance sheet.

Focus on fire and security, electronics and healthcare provided stable cash flows.

A scandal-scarred conglomerate can be rebuilt by replacing leadership, restoring financial controls and paying down debt before chasing growth again.

Tyco kept improving through fiscal 2005 and 2006, and Breen later split the group into three focused public companies (2006–2007), completing the portfolio cleanup the turnaround had begun.