ADT 2002 Annual Report Download - page 121

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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
23. Shareholders’ Equity (continued)
TyCom (for fiscal 2001 and 2000), the Company’s pro forma net income and pro forma net income per
common share for fiscal 2002, fiscal 2001 and fiscal 2000 would have been as follows:
2002 2001 2000
(restated) (restated) (restated)
Net (loss) income—pro forma (in millions) ....... $(9,594.9) $3,076.9 $3,936.0
Net (loss) income per common share—pro forma
Basic ................................. (4.83) 1.70 2.33
Diluted ............................... (4.83) 1.68 2.30
On the dates of grant using the Black-Scholes option-pricing model and assumptions set forth
below, the estimated weighted-average fair value of Tyco options granted during fiscal 2002 was $14.31;
the estimated weighted-average fair value of Tyco and TyCom options granted during fiscal 2001 was
$19.72 and $9.11, respectively; and the estimated weighted-average fair value of Tyco and TyCom
options granted during fiscal 2000 was $16.26 and $17.47, respectively.
The following weighted-average assumptions were used for fiscal 2002:
Tyco
Expected stock price volatility ....................... 52%
Risk free interest rate ............................. 4.03%
Expected annual dividend yield per share ............... $0.05
Expected life of options ............................ 5.0 years
The following weighted-average assumptions were used for fiscal 2001:
Tyco TyCom
Expected stock price volatility ....................... 39% 80%
Risk free interest rate ............................. 5.18% 4.71%
Expected annual dividend yield per share ............... $ 0.05 —
Expected life of options ............................ 4.4 years 4.0 years
The following weighted-average assumptions were used for fiscal 2000:
Tyco TyCom
Expected stock price volatility ....................... 36% 60%
Risk free interest rate ............................. 6.35% 6.19%
Expected annual dividend yield per share ............... $ 0.05 —
Expected life of options ............................ 4.5 years 4.5 years
The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of what the
effects may be in future years. SFAS No. 123 does not apply to awards prior to 1995. Additional awards
in future years are anticipated.
Deferred Stock Units—During fiscal 2002, the Company granted 1.7 million deferred stock units
(‘‘DSU’s’’) under the existing Incentive Plan described above, all of which were outstanding at
September 30, 2002. DSU’s are notional units that are tied to the value of Tyco common shares with
distribution deferred until termination of employment. Distribution, when made, will be in the form of
actual shares. Similar to restricted stock grants that vest through the passage of time, the fair market
value of the DSU’s at the time of the grant is amortized to expense over the period of vesting. The
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