ADT 2002 Annual Report Download - page 109

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18. Debt (continued)
(Footnotes continued from preceding page)
Also, in February 2002, TIG borrowed $3.855 billion under its 364-day unsecured revolving credit facility and exercised its
option to convert this facility into a term loan expiring on February 6, 2003. The loan, which is fully and unconditionally
guaranteed by Tyco, has a variable LIBO-based rate, which was 4.99% as of September 30, 2002.
Proceeds from the bridge loan and credit facilities were used to pay off maturing commercial paper at the scheduled
maturities and to provide additional available capital for Tyco.
(3) During the first quarter of fiscal 2002, Tyco repaid upon maturity its $300.0 million 6.5% public notes due 2001.
(4) During the fourth quarter of fiscal 2002 TIG paid off its $1.037 billion 6.875% private placement notes due 2002.
(5) These debentures are due in February 2021. However, TIG is required to repurchase these debentures based on certain
contractual put provisions at the option of the holders at the accreted value of approximately $1.9 billion in February 2003.
TIG may repurchase them for cash or Tyco common shares or some combination thereof. If the holders of the debentures
exercise their put option, the number of common shares needed to satisfy the put option in lieu of cash is the fair value of
Tyco’s stock, based on the price for a defined period of time around the settlement date. Based on Tyco’s stock prices as of a
recent date (December 20, 2002), we would need to issue approximately 110 million common shares if all of the debentures
were put back to TIG and we elected to use common shares to satisfy all of the debentures. Any shares issuable under the
debentures were registered at the time of the offering. At the option of the holders Tyco may be required to repurchase the
remaining debentures for cash at the then accreted value in February 2005, 2007, 2009 and 2016. During fiscal 2002 TIG
repurchased $475.7 million (principal amount at maturity) of these debentures.
(6) In June 1998, TIG issued $750.0 million 6.25% Dealer Remarketable Securities (‘‘Drs.’’) due 2013. Under the terms of the
Drs., the Remarketing Dealer has an option to remarket the Drs. in June 2003. If this option is exercised it would subject
the Drs. to mandatory tender to the Remarketing Dealer and reset the interest rate to an adjusted fixed rate until
June 2013. If the Remarketing Dealer does not exercise its option, then all Drs. are required to be tendered to the Company
in June 2003. If these debentures are tendered, TIG would be required to repurchase them for cash.
(7) These debentures are due in November 2020. However, the Company is required to repurchase the remaining debentures
based on certain contractual put provisions at the option of the holders at the then accreted value in November 2003. Tyco
may be required to repurchase these debentures for cash at the option of the holders at the then accreted value in
November 2005, 2007 and 2014.
(8) In November 2001, TIG sold A500.0 million 4.375% notes due 2004, A685.0 million 5.5% notes due 2008, £200.0 million
6.5% notes due 2011 and £285.0 million 6.5% notes due 2031, utilizing capacity available under TIG’s Euro Medium Term
Note Programme established in September 2001. The notes are fully and unconditionally guaranteed by Tyco. The net
proceeds of all four tranches were the equivalent of $1,726.6 million and were used to repay borrowings under TIG’s
commercial paper program.
(9) In October 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 commercial paper program.
(10) As a result of the rating agencies’ downgrade of Tyco’s debt to below investment grade status in June 2002, TIG was
required to pay $256.7 million to repurchase its ¥30 billion 3.5% notes due 2030 in July 2002. In addition, the rating of
below investment grade status caused the interest rate on our $400 million 7.2% notes due 2008 to increase to 8.2%, until
such time that the rating becomes investment grade by both S&P and Moody’s.
(11) These debentures, plus $108.6 million of the amount shown as other, comprise the current portion of long-term debt as of
September 30, 2002.
In January 2002, TIG entered into a $1.5 billion bridge loan, which was fully and unconditionally
guaranteed by Tyco, which had a weighted-average interest rate of 3.66%. TIG repaid $645.0 million in
April 2002 and the remainder in June 2002.
Some of our debt agreements, including our bank credit agreements, contain covenants that would
result in a default if our total debt as a percentage of total capitalization (total debt and shareholders’
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