(Bloomberg) ? Bermuda-based Tyco International Ltd., the world?s biggest maker of electric connectors and security systems, said third-quarter profit rose 63 percent, lifted by a rebounding economy and lower costs. The company raised its 2004 forecast.

Net income in the quarter ended June 30 rose to $923 million, or 43 cents a share, from $566.5 million, or 27 cents, a year earlier. Sales climbed 11 percent to $10.41 billion, helped by a weaker US dollar, Tyco said in a statement.

Profit at Tyco?s fire and security, electronics and health units rose as chief executive officer Edward Breen cut debt and costs at a company created by $64 billion of acquisitions under ex- CEO Dennis Kozlowski. Tyco?s net debt was cut to $13.1 billion, and Breen said the company now intends to get it ?closer to $10 billion? as he seeks further upgrades to Tyco?s credit ratings.

?As we move into ?05, you?ll be hearing more from us from the standpoint of a share buyback and/or dividend move,? Breen told investors on a conference call, adding that any acquisitions would be in the second half of 2005 at the earliest and ?modest? in size, as debt reduction remains a priority. ?Clearly we?re investment grade now, but we?re at the lowest level and we want to move that up a little bit.?

Breen?s debt reduction efforts already have won the company improvements in its credit rating, lowering its borrowing costs. On June 3, Moody?s Investors Service raised Tyco?s long-term debt rating to Baa3, the lowest investment grade, about a week after Standard & Poor?s lifted its rating to BBB, two levels above junk status.

Tyco?s ?long-term vision was to get a single-A corporate credit rating from the agencies, and they are certainly making progress,? said Joel Levington, the debt analyst at Standard & Poor?s, who raised Tyco?s rating in May, adding Tyco hasn?t achieved the rating yet. Payments to the pension plan and continued debt attention ?from a credit perspective is certainly going to help achieve that goal.?

Tyco last split its stock in 1997 and hasn?t raised the quarterly dividend of 1.25 cents a share since, giving it a dividend yield of .16 percent, far less than the Standard & Poor?s 500 index yield of 1.68 percent.

Tyco raised its profit forecast to a range of $1.61 to $1.63 a share, excluding restructuring and early debt retirement costs. For the year ending Sept. 30, Breen had forecast profit of $1.52 to $1.58 a share for the year and 39 cents to 42 cents for the quarter. Analysts expected $1.59 for the year and 42 cents in the third quarter, according to the average forecast of 12 analysts polled by Thomson Financial.

Shares of Bermuda-based Tyco, run from West Windsor, New Jersey, rose 59 cents to $31.83 at 2:09 p.m. in New York Stock Exchange composite trading. They had climbed 18 percent so far this year.

Tyco?s bonds were little-changed, traders said. The 6 percent 2013 notes were bid at 96 basis points more than comparable U.S. treasuries and offered at 91 basis points more than Treasuries, traders said.

Net debt, or debt minus cash and securities that can readily be turned into cash, fell to $13.1 billion in the third quarter from $14.6 billion at the end of the second.

Total on-balance sheet debt was $17.1 billion after $630 million in debt payments, down from $17.7 billion at the end of the second quarter. Tyco?s total on balance-sheet debt peaked under Kozlowski at about $26 billion.

Third-quarter interest expense was $224 million, down 22 percent from the same period a year ago, Tyco said. The company will also continue to make payments to its pension plans, now underfunded by about $1.9 billion, Chief Financial Officer David FitzPatrick said on the call.

Tyco last borrowed on public debt markets when it sold $4.5 billion of securities convertible to stock in January, 2003. Those are well ?in the money,? meaning the stock is trading above prices at which the securities are convertible into common shares. Tyco continues to count the convertibles as debt under current regulations.

Tyco spent $3 million on restructuring in the quarter. Through June 30, the company had shut 142 facilities and sliced 5,300 positions under the program announced in November, the company said. It?s divested 17 businesses as part of that program.

The rest of the 7,200 job cuts announced in November will be made in the fourth quarter, and there will be ?no spillover? of restructuring costs into fiscal 2005, Breen said.

?Fire and security, health care ? they?re the kinds of businesses you want to be in right now,? said David Giroux, an analyst at T. Rowe Price & Associates, with more than 18 million Tyco shares. ?They have good visibility and nice growth.?

Breen said the company is working to accelerate growth at the fire and security unit, which includes ADT. Profit there rose 48 percent in the quarter on a 4 percent sales increase and more efficient operations and reduced costs.

The commercial construction market may begin to rise, helping the fire systems business and further consolidation and reworking of the sales force will allow more new products to be introduced next year, Breen said.