ADT 2001 Annual Report Download - page 35

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The provision for income taxes in the Consolidated State-
ment of Operations for Fiscal 2001 was $1,284.9 million, but the
amount of income taxes paid (net of refunds) during the year
was $722.9 million. The difference is due to timing differences,
as well as the tax benefits related to the exercise of share
options. The current income tax liability at September 30, 2001
was $1,845.0 million, as compared to $1,650.3 million at Sep-
tember 30, 2000.
The net change in working capital, net of the effects of
acquisitions and divestitures, was an increase of $466.0 million
in Fiscal 2001. The components of this change are set forth in
detail in Tyco Industrial’s Consolidated Statement of Cash
Flows. The increase in working capital accounts is attributable
to the higher level of business activity in Fiscal 2001 as reflected
in the increased revenue over the prior year. We focus on maxi-
mizing the cash flow from our operating businesses and attempt
to keep the working capital employed in the businesses to the
minimum level required for efficient operations.
During Fiscal 2001, we used $1,326.1 million to repurchase
our own common shares under our ongoing share buyback pro-
gram. We repurchase our own shares from time to time in the
open market to satisfy certain stock-based compensation
arrangements, such as the exercise of share options, or to use for
acquisitions.
During Fiscal 2001, Tyco sold 39 million common shares for
approximately $2,198.0 million in an underwritten public offer-
ing. Net proceeds from the offering were $2,196.6 million and
were used to repay debt incurred to finance a portion of the
acquisition of CIT.
During Fiscal 2001, we received proceeds of $545.0 million
from the exercise of common share options. In addition, during
Fiscal 2001, we received proceeds of $904.4 million, net of cash
sold, primarily from the sale of our ADT Automotive business.
The source of the cash used for acquisitions in Fiscal 2001
was primarily through the issuance of debt, free cash flow, the
sale of common shares and proceeds on the sale of businesses.
Goodwill and other intangible assets were $28,740.9 million at
September 30, 2001, compared to $16,332.6 million at Septem-
ber 30, 2000. At September 30, 2001, Tyco Industrial’s total debt
was $21,619.0 million, as compared to $10,999.0 million at Sep-
tember 30, 2000. This increase resulted principally from net pro-
ceeds of approximately $3,374.0 million and $2,203.4 million
from the sale of zero coupon convertible debentures due 2020
and 2021, respectively; $1,982.1 million from the sale of notes due
2006 and 2011; $1,787.9 million from the sale of notes due 2003
and 2006; and borrowings under Tyco International Group S.A.’s
(“TIG”) commercial paper program. For a full discussion of debt
activity, see Note 6 to the Consolidated Financial Statements.
Shareholders’ equity was $31,737.4 million, or $16.40 per
share, at September 30, 2001, compared to $17,033.2 million,
or $10.11 per share, at September 30, 2000. The increase in
shareholders’ equity was due primarily to the issuance of
approximately 211.2 million common shares valued at
$10,435.3 million for the acquisitions of Mallinckrodt and CIGI
in October 2000, InnerDyne in December 2000, Scott in
May 2001 and CIT in June 2001; net income of $3,970.6 million;
and the sale of 39 million common shares for net proceeds of
$2,196.6 million as discussed above. This increase was partially
offset by the repurchase of our common shares for approxi-
mately $1,326.1 million and an unrealized loss on available for
sale securities of $1,267.9 million. Total debt as a percent of total
capitalization (total debt and shareholders’ equity) was 41% at
September 30, 2001 and 39% at September 30, 2000. Net debt
(total debt less cash and cash equivalents) as a percent of total
capitalization was 37% at September 30, 2001 and 35% at Sep-
tember 30, 2000.
On October 26, 2001, TIG sold $1,500.0 million 6.375% notes
due 2011 under its $6.0 billion shelf registration statement
in a public offering. The notes are fully and unconditionally
guaranteed by Tyco. The net proceeds of approximately
$1,487.8 million were used to repay borrowings under TIG’s com-
mercial paper program.
On November 13, 2001, Tyco completed the acquisition of
Sensormatic Electronics Corporation (“Sensormatic”), a leading
supplier of electronic security solutions to the retail, commercial
and industrial market-places. The acquisition is valued at
approximately $2.3 billion, including the assumption of $116
million of net debt. An aggregate of approximately 48 million
common shares of Tyco were issued in exchange for all the out-
standing capital stock of Sensormatic.
On November 19, 2001, TIG issued €500 million 4.375%
notes due 2005, €685 million 5.5% notes due 2009, £200 million
6.5% notes due 2012 and £285 million 6.5% notes due 2032, uti-
lizing the capacity available under TIG’s European Medium
Term Note Programme established in September 2001. The notes
are fully and unconditionally guaranteed by Tyco. The net pro-
ceeds of $1,726.6 million were used to repay borrowings under
TIG’s commercial paper program.
On December 18, 2001, we completed our amalgamation
with TyCom and each of the approximately 56 million TyCom
common shares not owned by Tyco were converted into the
right to receive 0.3133 of a Tyco common share. Upon completion
of the amalgamation, TyCom became a wholly-owned subsidiary
of Tyco.
We believe that our cash flow from Tyco Industrial’s opera-
tions, together with our existing credit facilities and other credit
arrangements, is adequate to fund Tyco Industrial’s operations.