ADT 2005 Annual Report Download - page 176

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Discontinued Operations and Divestitures (Continued)
The following table reflects net revenue, pre-tax income from discontinued operations, pre-tax loss
on sale of discontinued operations including impairments and costs to sell and income taxes for 2005,
2004 and 2003 ($ in millions):
2005 2004 2003
Net revenue ........................................ $2,053 $2,631 $2,546
Pre-tax income from discontinued operations ................. 84 71 208
Pre-tax loss on sale of discontinued operations ............... (262) (132) —
Income taxes ........................................ (10) (8) (35)
(Loss) income from discontinued operations, net of income taxes . . $ (188) $ (69) $ 173
(Gains) losses and impairments on divestitures, net
During 2003, the Company conducted a comprehensive review of its core businesses, and as a
result, implemented a divestiture program in early 2004. During 2004, in connection with the program,
the Company divested 21 and liquidated four non-core businesses across all business segments primarily
within Fire and Security. During 2004, the Company recorded net losses and impairments on
divestitures of $116 million (including $60 million of goodwill impairment charges) in continuing
operations in connection with the divestiture or write-down to fair value of certain held for sale
businesses.
In November 2004, Tyco agreed to sell the TGN, its undersea fiber optic telecommunication
network. The sale was consummated on June 30, 2005. As part of the sale transaction, Tyco received
gross cash proceeds of $130 million, and the purchaser assumed certain liabilities. In connection with
this sale, Tyco recorded a $303 million pre-tax gain which is reflected in (gains) losses and impairments
on divestitures in the Consolidated Statement of Income for 2005. The Company has presented the
operations of the TGN in continuing operations as the criteria for discontinued operations were not
met.
During 2005, the Company divested ten businesses that were reported as continuing operations in
Fire and Security, Healthcare and Engineered Products and Services. The Company recorded net losses
and impairments on divestitures of $32 million, including a $3 million charge reflected in cost of sales,
in connection with the divestiture and liquidation of these businesses, as well as the write-down to
estimated fair value of certain held for sale businesses.
100 2005 Financials