ADT 2003 Annual Report Download - page 103

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101
As of September 30, 2003 and 2002, the Company had $130.4
million and $140.1 million, respectively, of intellectual property,
not subject to amortization. These balances consist primarily of
trademarks acquired from Sensormatic. As of September 30,
2002, the Company had $0.2 million customer relationships
that are not subject to amortization and as of September 30,
2003 and 2002, the Company had $28.3 million and $26.2 mil-
lion, respectively, of other intangible assets that are not subject
to amortization.
Intangible asset amortization expense for fiscal 2003, fiscal
2002 and fiscal 2001 was $725.0 million, $620.9 million and
$399.3 million, respectively. The estimated aggregate amortization
expense on intangible assets currently owned by the Company
is expected to be approximately $700 million for fiscal 2004,
$600 million for fiscal 2005, $550 million for fiscal 2006,
$500 million for fiscal 2007, and $450 million for fiscal 2008.
See Note 6 for information regarding the impairment of
intangible assets.
18.
Related Party Transactions
The Company has amounts due related to loans and advances
issued to employees in prior years under the Company’s Key
Employee Loan Program, relocation programs and other
advances made to executives. Loans were provided to employees
under the Company’s Key Employee Loan Program, which is
now discontinued except for outstanding loans, for the payment
of taxes upon the vesting of shares granted under our Restricted
Share Ownership Plans. The loans are not collateralized and
bear interest, payable annually, at a rate based on the six-month
LIBOR, calculated annually as the average of the 12 rates in
effect on the first day of the month. Loans are generally repayable
in ten years, except that earlier payments are required under
certain circumstances, such as when an employee is terminated.
In addition, the Company issued mortgages to certain employ-
ees under employee relocation programs. These mortgages are
generally payable in 15 years and are collateralized by the
underlying property. During fiscal 2003 and fiscal 2002, the
maximum amount outstanding under these programs was
$82.4 million and $117.5 million, respectively. Loans receivable
under these programs, as well as other unsecured advances out-
standing, were $78.5 and $88.1 million at September 30, 2003
and 2002, respectively. Certain of the above loans totaling $23.9
million and $30.3 million at September 30, 2003 and 2002,
respectively, are non-interest bearing. Interest income on inter-
est bearing loans totaled $0.5 million, $5.5 million, and $1.3
million in fiscal 2003, fiscal 2002 and fiscal 2001, respectively.
During fiscal 2003, the Company engaged in commercial
transactions in the normal course of business with companies
where our Directors were employed and served as officers,
including Marsh & McLennan Companies, Inc., Brunswick
Corporation, VF Corporation, Verizon Communications, Inc.,
Imperial Chemical Industries PLC and MicroWarehouse, Inc.
Sandra S. Wijnberg, a member of Tyco’s Board of Directors, is
an executive officer of Marsh & McClennan Companies, Inc.
George W. Buckley, a Director, is an executive officer of
Brunswick Corporation. Mackey J. McDonald, a Director, is an
executive officer of VF Corporation. Bruce S. Gordon, a
Director, is an officer of Verizon Communications, Inc.
Brendan R. O’Neill and Jerome B. York, both Directors, were
executive officers of Imperial Chemical Industries PLC and
MicroWarehouse, Inc., respectively, at the time of these com-
mercial transactions. Purchases from Marsh & McLennan
Companies, Inc. and Imperial Chemical Industries PLC during
fiscal 2003 were approximately $18 million and $16 million,
respectively. Purchases from other companies noted above
during fiscal 2003 aggregated less than $15 million.
TYCO INTERNATIONAL LTD.
Intangible assets, net were $5,790.0 million and $5,805.8 million at September 30, 2003 and 2002, respectively. Accumulated
amortization amounted to $2,492.9 million and $1,655.1 million at September 30, 2003 and 2002, respectively. The following table
sets forth the gross carrying amount and accumulated amortization of the Company’s intangible assets ($ in millions):
SEPTEMBER 30, 2003 SEPTEMBER 30, 2002
WEIGHTED- WEIGHTED-
GROSS AVERAGE GROSS AVERAGE
CARRYING ACCUMULATED AMORTIZATION CARRYING ACCUMULATED AMORTIZATION
AMOUNT AMORTIZATION PERIOD (1) AMOUNT AMORTIZATION PERIOD (1)
Contracts and related customer relationships $4,413.7 $1,737.9 12 years $3,780.0 $1,191.3 12 years
Intellectual property 3,608.6 692.7 23 years 3,470.8 443.0 21 years
Other 260.6 62.3 27 years 210.1 20.8 28 years
Total $8,282.9 $2,492.9 18 years $7,460.9 $1,655.1 17 years
(1) Intangible assets not subject to amortization are excluded from the calculation of the weighted-average amortization period.