ADT 2001 Annual Report Download - page 51

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Consolidated Financial Statements include the consoli-
dated accounts of Tyco International Ltd., a company incorpo-
rated in Bermuda (“Tyco”), and its subsidiaries (Tyco and all its
subsidiaries, hereinafter “we” or the “Company”) and have
been prepared in United States dollars, unless indicated other-
wise, in accordance with generally accepted accounting princi-
ples in the United States (“GAAP”).
On June 1, 2001, a subsidiary of the Company acquired The
CIT Group, Inc. (“CIT”), an independent commercial finance
company, now Tyco Capital Corporation. The discussion and
financial data presented herein are furnished separately for
each of the following:
• Tyco Industrial
— This represents Tyco and all its subsidiaries
other than Tyco Capital, and includes the results of operations
of Tyco Capital from June 2, 2001 on the equity method of
accounting.
• Tyco Capital — This represents Tyco Capital Corporation and all
its subsidiaries and reflects their results of operations from
June 2, 2001. In addition, Tyco Capital includes certain inter-
national subsidiaries that were sold by Tyco Capital Corpora-
tion to a non-U.S. subsidiary of Tyco on September 30, 2001.
• Consolidated — This represents Tyco Industrial and Tyco Capital
on a consolidated basis.
As described more fully in Note 3, subsidiaries of Tyco
merged with United States Surgical Corporation (“U.S. Surgi-
cal”) and AMP Incorporated (“AMP”) on October 1, 1998 and
April 2, 1999, respectively. These transactions are referred to
herein as the “mergers.” The Consolidated Financial Statements
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 U.S. Sur-
gical and AMP as if they had been subsidiaries of Tyco for all
periods presented.
BUSINESS
The Company operates in the following business segments:
Electronics
Electronics’ 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, smart card components, identification
and labeling products, energy solutions, power products,
switches and battery assemblies; and
• designing, manufacturing, installing, operating and main-
taining undersea cable communications systems through our
telecommunications subsidiary, TyCom Ltd. (“TyCom”), and
selling bandwidth on our own cable network.
Fire and Security Services
Fire and Security Services’ products and services include:
• designing, installing and servicing a broad line of fire detection,
prevention and suppression systems, and manufacturing and
servicing of fire extinguishers and related products;
• designing, installing, monitoring and maintaining electronic
security systems;
• designing and manufacturing valves and related products; and
• providing a broad range of consulting, engineering and con-
struction management and operating services for water,
wastewater, environmental, transportation and infrastructure
markets.
Healthcare and Specialty Products
Healthcare and Specialty Products include:
• a wide variety of disposable medical products, including
wound care and closure products, syringes and needles,
sutures and surgical staplers, products used for vascular
therapy and respiratory care, infant medical accessories,
incontinence products, anesthetic supplies, electrosurgical
instruments and laparoscopic instruments; and
• polyethylene film and film products such as flexible plastic
packaging, plastic bags and sheeting, coated and laminated
packaging materials, tapes and adhesives, plastic garment
hangers and pipeline coating for the oil, gas and water distri-
bution industries.
Tyco Capital
Tyco Capital’s services include:
• commercial financing and leasing — offering equipment, com-
mercial factoring and structured financing; and
• specialty financing and leasing — consumer lending and retail
sales and vendor financing.
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 conducted through Tyco’s subsidiaries. The Company consol-
idates companies in which it owns or controls more than fifty per-
cent 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 poolings of inter-
ests (see Note 3). All significant intercompany balances and trans-
actions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
All highly liquid investments purchased with an original matu-
rity of three months or less are considered to be cash equivalents.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS