ADT 2002 Annual Report Download - page 66

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Acquisitions and Divestitures (continued)
Fiscal 2002 acquisitions include, among others, SBC/Smith Alarm Systems (‘‘Smith Alarm’’) and
Century Tube Corporation (‘‘Century’’) in October 2001; Sensormatic Electronics Corporation
(‘‘Sensormatic’’), Transpower Technologies, DSC Group and Water & Power Technology (‘‘Water &
Power’’) in November 2001; Linq Industrial Fabrics, Inc. (‘‘Linq’’) and the purchase of the remaining
minority public interest of TyCom in December 2001; Paragon Trade Brands, Inc. (‘‘Paragon’’) and
Communications Instruments, Inc. (‘‘CII’’) in January 2002; and Clean Air Systems in February 2002.
Smith Alarm, a security monitoring company for both residential and commercial customers, was
purchased for $78.2 million in cash and has been integrated within the Fire and Security Services
segment. Century, a manufacturer of steel tubing, was purchased for $125.5 million in cash and has
been integrated within the Engineered Products and Services segment. Sensormatic, a leading supplier
of electronic security solutions to the retail, commercial and industrial market places, was purchased for
approximately 47.8 million Tyco common shares valued at $1,918.8 million, plus the fair value of stock
options and pre-existing put option rights assumed of $147.9 million, and has been integrated within
the Fire and Security Services segment. The primary reason for the Sensormatic acquisition was that it
presented Tyco with an opportunity to expand Tyco’s security product range to include electronic article
surveillance systems of which Sensormatic was the recognized market leader. Additionally, the
acquisition allowed us to expand our presence in the access control and video systems businesses.
Sensormatic was a global company with approximately $1.1 billion in revenue and a talented workforce,
including an established research and development group. The acquisition presented us with many
synergy opportunities in each of our operating regions around the world. Transpower Technologies, a
designer and manufacturer of inductors and isolation transformers, was purchased for $62.6 million in
cash and has been integrated within the Electronics segment. DSC Group, a manufacturer of security
alarms, fire alarms and panels, was purchased for $90.6 million in cash and has been integrated within
the Fire and Security Services segment. Water & Power, a provider of water treatment products and
services, was purchased for $40.8 million in cash and has been integrated within the Engineered
Products and Services segment. Linq, a manufacturer of flexible intermediate bulk containers, was
purchased for $32.5 million in cash and has been integrated within the Plastics and Adhesives segment.
TyCom is a leading provider of undersea fiber optic networks and services. In December 2001, the
Company completed its amalgamation with TyCom, and TyCom shares not already owned by Tyco were
converted into approximately 17.7 million Tyco common shares valued at $819.9 million. Paragon, a
global supplier of infant disposable diapers and other absorbent personal care products, was purchased
for $706.8 million in cash and has been integrated within the Healthcare segment. The primary reason
for the Paragon acquisition was to acquire a leader in the global supply of disposable absorbent
personal care products. Additionally, the acquisition allowed us to expand our presence in the
disposable private label diapers and training pants sectors. The acquisition presented us with many
synergy opportunities such as consolidation of manufacturing facilities and administrative functions and
elimination of duplicate sales and marketing overhead. CII, a provider of advanced control electronic
solutions in high performance relays, general-purpose relays, transformers, and EMI/RFI filters, was
purchased for $214.0 million in cash and has been integrated within the Electronics segment. Clean Air
Systems, a manufacturer of pollution control systems in industrial plants and products including
industrial valves, controls and pneumatics, was purchased for $31.8 million in cash and has been
integrated within the Engineered Products and Services segment. In addition to the acquisitions listed
above, Tyco paid cash of $1,139.3 million to acquire approximately 1.4 million customer contracts for
electronic security services through the ADT dealer program and $459.0 million to acquire
approximately 120 other smaller companies. The acquisitions comprised primarily businesses which:
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