ADT 2000 Annual Report Download - page 43

FORTY ONE
[1 ] Summary of Significant Accounting Policies
BUSINESS
Tyco International Ltd. (the “Company” or “Tyco”) manages its busi-
ness in the following five operating segments:
ELECTRONICS
The Electronics segment’s products and services include:
• designing, engineering and manufacturing of electronic con-
nector systems, fiber optic components, wireless devices, heat
shrink products, power components, wire and cable, relays,
sensors, touch screens, identification and labeling products,
switches and battery assemblies; and
• designing and manufacturing of multi-layer printed circuit
boards, backplane assemblies, electronic modules and similar
components.
TELECOMMUNICATIONS
The Company’s 86% owned subsidiary, TyCom Ltd. (“TyCom”), is a
leading independent provider of transoceanic fiber optic networks
and services. TyCom’s products and services include:
• design, engineering, manufacture and installation of undersea
cable communications systems;
• service and maintenance of major undersea cable networks;
and
• design, manufacture and installation of a global undersea
fiber optic network, known as the TyCom Global NetworkTM
(“TGN”). TyCom plans to operate, maintain and sell bandwidth
capacity on the TGN.
HEALTHCARE AND SPECIALTY PRODUCTS
The Healthcare and Specialty Products segment’s products and ser-
vices include:
• a wide variety of disposable medical products, including wound
care products, syringes and needles, sutures and surgical sta-
plers, incontinence products, electrosurgical instruments and
laparoscopic instruments;
• flexible plastic packaging, plastic bags and sheeting, coated
and laminated packaging materials, tapes and adhesives, and
plastic garment hangers; and
• ADT Automotive’s auto redistribution services (See Note 25).
FIRE AND SECURITY SERVICES
The Fire and Security Services segment’s products and services
include:
• designing, installing and servicing a broad line of fire detection,
prevention and suppression systems;
• providing electronic security installation and monitoring ser-
vices; and
• manufacturing and servicing fire extinguishers and related
products.
FLOW CONTROL PRODUCTS AND SERVICES
The Flow Control Products and Services segment’s products and
services include:
• a full line of valves and related products for industrial and
process control, pipe and tubular products, electrical raceway
products and fire sprinkler devices; and
• a broad range of consulting, engineering, construction man-
agement and operating services for the water, wastewater, envi-
ronmental, transportation and infrastructure markets.
BASIS OF PRESENTATION
The consolidated financial statements have been prepared in United
States dollars in accordance with generally accepted accounting
principles in the United States. As described more fully in Note 2,
Tyco merged with United States Surgical Corporation (“USSC”) and
AMP Incorporated (“AMP”) on October 1, 1998 and April 2, 1999,
respectively. These transactions are referred to herein as the “merg-
ers.” The consolidated financial statements include the consoli-
dated accounts of Tyco, a company incorporated in Bermuda, and
its subsidiaries. They have been prepared following the pooling
of interests method of accounting for the mergers and, therefore,
reflect the combined financial position, operating results and cash
flows of USSC and AMP as if they had been combined for all
periods presented.
PRINCIPLES OF CONSOLIDATION
Tyco is a holding company whose assets consist of its investments
in its subsidiaries, intercompany balances and holdings of cash and
cash equivalents. The businesses of the consolidated group are con-
ducted through the Company’s subsidiaries. The Company consoli-
dates companies in which it owns or controls more than fifty percent
of the voting shares unless control is likely to be temporary. The
results of companies acquired or disposed of during the fiscal year
are included in the consolidated financial statements from the
effective date of acquisition or up to the date of disposal except
in the case of mergers accounted for as pooling of interests
(See Note 2). All significant intercompany balances and transac-
tions have been eliminated in consolidation.
CASH EQUIVALENTS
All highly liquid investments purchased with a maturity of three
months or less are considered to be cash equivalents.
INVENTORIES
Inventories are recorded at the lower of cost (primarily first-in, first-
out) or market value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is principally recorded at cost less
accumulated depreciation. Maintenance and repair expenditures
are charged to expense when incurred. For the years ended Sep-
tember 30, 2000, 1999 and 1998, the Company capitalized inter-
est of $10.8 million, $8.7 million and $9.0 million, respectively. The
straight-line method of depreciation is used over the estimated use-
ful lives of the related assets as follows:
Buildings and related improvements 5 to 50 years
Leasehold improvements Remaining term of the lease
Subscriber systems 10 to 14 years
Other plant, machinery, equipment and
furniture and fixtures 2 to 25 years
Notes to Consolidated Financial Statements