ADT 2005 Annual Report Download - page 185

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for 2004 and 2005 are as follows ($ in millions):
Engineered
Fire and Products and
Security Electronics Healthcare Services Total
Balance at September 30, 2003 ................. $8,078 $7,478 $6,223 $3,045 $24,824
Purchase accounting adjustments(1) .............. (59) (19) (158) 4 (232)
Acquisitions ............................... — — — 10 10
Divestitures ............................... (124) (25) — (4) (153)
Held for sale .............................. (12) — — — (12)
Currency translation ......................... 191 52 9 111 363
Balance at September 30, 2004 ................. 8,074 7,486 6,074 3,166 24,800
Purchase accounting adjustments(1) .............. (54) (26) (169) 2 (247)
Acquisitions ............................... 4 2 12 — 18
Divestitures ............................... (5) — — — (5)
Held for sale .............................. (2) — — — (2)
Currency translation ......................... 11 (6) (1) (11) (7)
Balance at September 30, 2005 ................. $8,028 $7,456 $5,916 $3,157 $24,557
(1) Adjustments to previously completed acquisitions primarily related to income tax matters.
2005 Activity
During 2005, there were no goodwill impairments related to continuing operations.
2004 Activity
During 2004, the Company recorded goodwill impairments of $60 million, of which $48 million
related to divested businesses and $12 million related to businesses then classified as held for sale.
These impairments are included within (gains) losses and impairments on divestitures, net on the
Consolidated Statements of Income.
2003 Activity
In 2003, the Company reorganized its reporting structure. As part of that reorganization, the
Company finalized a plan to sell the TGN, the major operating asset of the Tyco Submarine
Telecommunications business. The results of the TGN business were previously included in Electronics,
but have been presented within Corporate and Other since September 2003 through the date of
disposition in 2005.
The reorganization resulted in a change in the composition of its reporting units. As a result,
goodwill was reassigned to the new reporting units using a relative fair value allocation approach,
resulting in the recognition of impairment charges of $278 million in Power Systems, Electrical
Contracting Services and the Printed Circuit Group. This charge was based on a valuation performed
by management with the assistance of a third party consultant using an income approach based on the
present value of estimated future cash flows of each of the reporting units. After the impairment, there
was no goodwill remaining at the Power Systems and Printed Circuit Group reporting units.
2005 Financials 109