ADT 2003 Annual Report Download - page 106

104
19.
Debt
Debt is as follows(1) ($ in millions):
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
Bank credit agreement (2) $««««««««««— $««««««««««—
Variable-rate unsecured term
loan from bank due 2003 (3) —3,855.0
6.25% public Dealer Remarketable
Securities with a 2003 put option (4) —751.9
Floating rate private placement notes
due 2003 —493.8
4.95% notes due 2003 —565.1
6.0% notes due 2003 (8) 72.8 72.7
Zero coupon convertible
senior debentures with a
November 2003 put option (5) (8) 2,476.5 3,519.1
5.875% public notes due 2004 400.0 399.9
4.375% Euro denominated notes
due 2004 573.4 487.4
6.375% public notes due 2005 749.3 748.8
6.75% notes due 2005 76.7 76.7
6.375% public notes due 2006 998.5 997.8
Variable rate unsecured revolving
credit facility due 2006 2,000.0 2,000.0
5.8% public notes due 2006 696.8 695.7
6.125% Euro denominated public notes
due 2007 686.7 583.9
6.5% notes due 2007 99.5 99.3
2.75% convertible senior debentures
with a 2008 put option (6) 3,000.0 —
6.125% public notes due 2008 398.5 398.2
8.2% notes due 2008 388.8 388.4
5.50% Euro denominated notes
due 2008 784.1 666.6
6.125% public notes due 2009 391.8 394.7
Zero coupon convertible subordinated
debentures due 2010 27.0 26.3
6.75% public notes due 2011 998.4 998.2
6.375% public notes due 2011 1,499.6 1,499.6
6.50% British pound denominated
public notes due 2011 338.9 286.5
7.0% debentures due 2013 86.3 86.2
3.125% convertible senior debentures
with a 2015 put option (6) 1,500.0 —
Zero coupon convertible senior
debentures due 2021 (7) 0.7 1,944.6
7.0% public notes due 2028 497.0 496.9
6.875% public notes due 2029 789.1 788.6
6.50% British pound denominated
public notes due 2031 470.4 441.4
Other (8) (9) 968.3 484.8
Total debt 20,969.1 24,248.1
Less current portion 2,718.4 7,719.0
Long-term debt $18,250.7 $16,529.1
(1) Debt maturity dates are presented on a calendar basis, consistent with the respective
offering documents.
(2) In January 2003, Tyco International Group S.A. (“TIG”), a wholly-owned subsidiary of
the Company, entered into a $1.5 billion 364-day unsecured revolving credit facility
which also provides for issuance of unsecured letters of credit. The facility, which is
fully and unconditionally guaranteed by Tyco and certain of its subsidiaries and is
guaranteed in part by various subsidiaries of TIG, has a variable interest rate based on
LIBOR. The margin over LIBOR payable by TIG can vary depending upon changes in
its credit rating and in the market price of one of its outstanding debt securities. TIG
also pays a commitment fee of 0.50% annually on any unused portion of the line of
credit. The facility was not utilized in fiscal 2003.
(3) In January 2003, TIG repaid its $3.855 billion unsecured term loan from banks
scheduled to expire on February 6, 2003.
(4) In June 2003, TIG repurchased for cash all of its 6.25% Dealer Remarketable
Securities (“Drs.”) due 2013. The total Dollar Price paid was $902 million, based
upon the $750 million par value of the Drs. plus the difference between a Base Rate
of 5.55% and the then current ten-year United States Treasury yield-to-maturity.
(5) In November 2000, Tyco issued $4,657.5 million principal amount at maturity of
zero coupon convertible debentures due 2020 for aggregate net proceeds of approxi-
mately $3,374.0 million. The debentures accrete interest at a rate of 1.5% per
annum. During fiscal 2003, Tyco purchased $1,085.7 million (par value $1,415.2 mil-
lion) of the debentures for cash of approximately $1,062.8 million. On November 17,
2003, holders of principal amount at maturity of $3,196.7 million notified Tyco that
they had exercised their option to require Tyco to repurchase their notes at a price of
$775.66 per $1,000 principal at maturity representing the accreted value of the
notes on that date. On November 18, 2003, Tyco purchased these notes for cash of
$2,479.6 million.
(6) In January 2003, TIG issued $3.0 billion of 2.75% Series A convertible senior debentures
due January 2018 and $1.5 billion of 3.125% Series B convertible senior debentures
due January 2023. These debentures are fully and unconditionally guaranteed by
Tyco, and at any time prior to the stated maturity, holders may convert each of their
debentures into Tyco common shares at a rate of $22.7832 and $21.7476 respec-
tively, per share. Additionally, holders of the Series A debentures may require the
Company to purchase all or a portion of their debentures on January 15, 2008 and
January 15, 2013, and holders of the Series B debentures may require the Company
to purchase all or a portion of their debentures on January 15, 2015. If the option is
exercised at any one of the aforementioned dates, TIG must repurchase the debentures
at par plus accrued but unpaid interest, and may elect to repurchase the securities
for cash, Tyco common shares, or some combination thereof. TIG may redeem for
cash some or all of the Series A debentures and Series B debentures at any time on
or after January 20, 2006 and January 20, 2008, respectively. Net proceeds of
approximately $4,387.5 million, before out-of-pocket expenses, from these debentures
were used primarily to repay debt.
(7) At February 12, 2003, the accreted value of TIG’s zero coupon convertible
debentures with a February 2003 put option was $1,850.8 million. On February 13,
2003, TIG purchased $1,850.1 million accreted value of these debentures for cash.
This purchase resulted from the exercise of investors’ option under the indenture to
require TIG to purchase at accreted value debentures validly surrendered by
February 12, 2003.
(8) These instruments, plus $169.1 million of the amount shown as other, comprise the
current portion of long-term debt as of September 30, 2003.
(9) Includes $562.2 million of debt recorded in connection with the adoption of FIN 46
(see Note 30).
Our bank credit agreements contain a number of financial
covenants, such as interest coverage and leverage ratios, and
restrictive covenants that limit the amount of debt we can incur
and restrict our ability to pay dividends or make other payments
in connection with our capital stock, to make acquisitions or
investments, to pledge assets and to prepay debt that matures
after December 31, 2004. Specifically, TIG is the borrower
under a 5-year, $2.0 billion revolving credit facility that contains
a financial covenant based on the Company’s leverage ratio.
The maximum allowable leverage ratio as defined under this
agreement is 52.5%. At September 30, 2003, this ratio declined to
46.3% from 51.3% at September 30, 2002. We also have several
TYCO INTERNATIONAL LTD.
Notes to Consolidated Financial Statements