ADT 1999 Annual Report Download - page 47

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The Company also assumed USSC’s agreement to potentially
pay up to approximately $70.0 million in common stock as of Septem-
ber 30, 1998 as additional purchase price consideration relative to an
acquisition consummated by USSC in 1997, if and when certain addi-
tional milestones and sales objectives are achieved. During March
and April 1999, a total of 140,002 Tyco common shares, valued at
approximately $5.2 million, were issued pursuant to this agreement.
This matter is the subject of pending litigation. The Company does not
expect to issue a material amount of additional shares pursuant to this
agreement.
3. Acquisitions and Divestitures
Fiscal 1999
In addition to the pooling of interests transactions discussed in Note
2, during Fiscal 1999, the Company purchased businesses in each of
its four business segments for an aggregate cost of $6,923.3 million,
consisting of $4,546.8 million in cash, net of cash acquired, the
issuance of 32.4 million common shares valued at $1,449.6 million
and the assumption of $926.9 million in debt. In addition, $354.4 mil-
lion of cash was paid during the year for purchase accounting liabili-
ties related to current and prior years’ acquisitions. The cash portions
of the acquisition costs were funded utilizing cash on hand, the
issuance of long-term debt and borrowings under the Company’s com-
mercial paper program. Each of these acquisitions was accounted for
as a purchase, and the results of operations of the acquired compa-
nies have been included in the consolidated results of the Company
from their respective acquisition dates.
In connection with these acquisitions, the Company recorded
purchase accounting liabilities of $525.4 million for transaction costs
and the costs of integrating the acquired companies within the various
Tyco business segments. Details regarding these purchase account-
ing liabilities are set forth below.
At the time each purchase acquisition is made, the Company
records each asset acquired and each liability assumed at its esti-
mated fair value, which amount is subject to future adjustment when
appraisals or other further information is obtained. The excess of
(a) the total consideration paid for the acquired company over (b) the
fair value of assets acquired less liabilities assumed and purchase
accounting liabilities recorded is recorded as goodwill. As a result of
acquisitions completed in Fiscal 1999, and adjustments to the fair val-
ues of assets and liabilities and purchase accounting liabilities
recorded for acquisitions completed prior to Fiscal 1999, the Company
recorded approximately $5,807.9 million in goodwill and other intan-
gibles.
The following table shows the fair values of assets and liabilities
and purchase accounting liabilities recorded for purchase acquisitions
completed in Fiscal 1999, adjusted to reflect changes in fair values of
assets and liabilities and purchase accounting
liabilities recorded for acquisitions completed prior to Fiscal 1999 (in
millions):
Receivables $ 695.0
Inventories 498.3
Prepaid expenses and other current assets 225.9
Property, plant and equipment 988.9
Goodwill and other intangible assets 5,807.9
Other assets 423.8
8,639.8
Accounts payable 335.5
Accrued expenses and other current liabilities 1,186.5
Other long-term liabilities 194.5
1,716.5
$6,923.3
Cash consideration paid (net of cash acquired) $4,546.8
Share consideration paid 1,449.6
Debt assumed 926.9
$6,923.3
Thus, in Fiscal 1999, the Company spent a total of $4,901.2 mil-
lion in cash related to the acquisition of businesses, consisting of
$4,546.8 million of cash in purchase price for these businesses (net of
cash acquired) plus $354.4 million of cash paid out during the year for
purchase accounting liabilities related to current and prior years’
acquisitions.
Fiscal 1999 purchase acquisitions include, among others, the
acquisition of Graphic Controls Corporation (“Graphic Controls”) in
October 1998, Entergy Security Corporation (“Entergy”) in January
1999, Alarmguard Holdings, Inc. (“Alarmguard”) in February 1999,
certain subsidiaries in the metals processing division of Glynwed
International, plc (“Glynwed”) in March 1999, Telecomunicaciones
Marinas, S.A. (“Temasa”), a wholly-owned subsidiary of Telefonica
S.A., in May 1999 and Raychem Corporation (“Raychem”) in August
1999. Graphic Controls, a leading designer, manufacturer, marketer
and distributor of disposable medical products, was purchased for
approximately $460 million, including the assumption of certain out-
standing debt, and is being integrated within the Healthcare and Spe-
cialty Products segment. Entergy and Alarmguard were purchased for
an aggregate of approximately $430 million and are being integrated
within the electronic security services business of the Fire and Secu-
rity Services segment. Glynwed, which is engaged in the production
of steel tubing, steel electrical conduit and other similar products, was
purchased for approximately $236 million and is being integrated
within the Flow Control Products segment. Temasa installs and main-
tains undersea cable systems and was purchased for approximately
$280 million. Temasa is being integrated into TSSL within the
Telecommunications and Electronics segment. Raychem, a leading
international designer, manufacturer and distributor of high-perfor-
mance electronic products for OEM businesses and for a broad range
of specialized telecommunications, energy and industrial applica-
tions, was purchased for a total of approximately $1,445.9 million in
cash and the issuance of approximately 32.4 million Tyco common
shares valued at approximately $1,449.6 million, plus the assumption