ADT 2005 Annual Report Download - page 190

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Debt (Continued)
In 2005, the Company repurchased $1,241 million principal amount of its outstanding 2.75%
convertible senior debentures due 2018 with a 2008 put option for $1,823 million and $750 million
principal amount of its outstanding 3.125% convertible senior debentures due 2023 with a 2015 put
option for $1,147 million. These repurchases resulted in a $1,013 million loss on the retirement of debt,
including the write-off of unamortized debt issuance costs, which is reflected in Other expense, net in
the Consolidated Statements of Income.
On December 16, 2004, Tyco International Group S.A., a wholly-owned subsidiary of the Company
organized under the laws of Luxembourg (‘‘TIGSA’’), entered into a $1.0 billion 5-year revolving credit
facility expiring on December 16, 2009. This facility replaced TIGSA’s $1.0 billion 364-day revolving
credit facility which was entered into in December 2003 and was terminated prior to its scheduled
expiration date of December 20, 2004. There were no amounts outstanding under the 364-day revolving
credit facility on the date of its termination. At September 30, 2005 there were no amounts borrowed
under this facility.
In June 2004, TIGSA entered into a $500 million 3-year unsecured letter of credit facility expiring
on June 15, 2007. The facility provides for the issuance of letters of credit, supported by a related line
of credit facility. TIGSA may only borrow under the line of credit agreement to reimburse the bank for
obligations with respect to letters of credit issued under this facility. TIGSA would pay interest on any
outstanding borrowings at a variable interest rate, based on the bank’s base rate or the Eurodollar rate,
as defined. Upon the occurrence of certain credit events, the interest rate on the outstanding
borrowings becomes fixed. The issuance of letters of credit under this facility during 2004 enabled the
release of approximately $480 million of restricted cash and investments. At September 30, 2005, letters
of credit in the amount of $488 million have been issued under this facility and a remaining $12 million
is available for issuance. There were no amounts borrowed under this facility at September 30, 2005
and 2004.
In December 2003, TIGSA entered into a $1.5 billion 3-year revolving bank credit facility. This
facility has a variable interest rate based on LIBOR. The margin over LIBOR payable by TIGSA can
vary based on changes in its credit rating. At September 30, 2005 and 2004, there were no amounts
borrowed under this facility.
The Company’s bank credit agreements contain a number of financial covenants, such as a limit on
the ratio of debt to earnings before interest, income taxes, depreciation, and amortization and
minimum levels of net worth, and limits on the incurrence of liens. At September 30, 2005, the
Company had two remaining synthetic lease facilities, with other covenants, including interest coverage
and leverage ratios. The Company’s outstanding indentures contain customary covenants including
limits on negative pledges, subsidiary debt and sale/leaseback transactions. None of these covenants are
presently considered restrictive to the Company’s operations. The Company is currently in compliance
with all of its debt covenants.
The fair value of debt was approximately $13.5 billion (book value of $12.6 billion) and
$19.2 billion (book value of $16.6 billion) at September 30, 2005 and 2004, respectively, based on
discounted cash flow analyses using current market interest rates.
The aggregate amounts of total debt maturing during the next five years and thereafter are as
follows (in millions): $1,954 in 2006, $759 in 2007, $1,383 in 2008 $1,734 in 2009, $19 in 2010 and
$6,705 thereafter.
114 2005 Financials