ADT 2005 Annual Report Download - page 210

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Share Plans (Continued)
The following table summarizes information about outstanding and exercisable Tyco options at
September 30, 2005:
Options Outstanding Options Exercisable
Weighted-Average
Remaining
Weighted-Average Contractual Weighted-Average
Range of Exercise Prices Number Exercise Price Life—Years Number Exercise Price
$6.17 to $10.00 ....... 7,494,065 $9.97 6.6 5,894,065 $9.97
10.13 to 19.90 ........ 22,756,594 15.00 6.8 15,831,399 15.16
20.01 to 29.87 ........ 36,476,295 25.72 6.5 25,677,251 24.91
30.16 to 40.00 ........ 30,861,286 35.59 6.9 12,935,221 35.36
40.69 to 50.00 ........ 27,460,834 44.93 4.9 27,060,834 44.96
50.20 to 58.28 ........ 12,851,406 52.72 4.5 12,851,406 52.72
60.79 to 142.42 ....... 2,602,054 93.90 4.7 2,602,054 93.90
Total ............. 140,502,534 32.80 6.1 102,852,230 34.36
On the dates of grant using the Black-Scholes option-pricing model and assumptions set forth
below, the estimated weighted-average fair value of Tyco options granted during 2005, 2004 and 2003
was $10.57, $10.69, and $6.34, respectively.
The following weighted-average assumptions were used for 2005, 2004 and 2003:
2005 2004 2003
Expected stock price volatility .............................. 35% 47% 64%
Risk free interest rate .................................... 3.88% 2.56% 2.48%
Expected annual dividend per share .......................... $0.40 $0.05 $0.05
Expected life of options (years) ............................. 4.1 3.9 4.3
Deferred Stock Units—Deferred Stock Units (‘‘DSUs’’) are notional units that are tied to the value
of Tyco common shares with distribution deferred until termination of employment. Distribution, when
made, will be in the form of actual shares. Similar to restricted share grants that vest through the
passage of time, the fair market value of the DSUs at the time of the grant is amortized to expense
over the period of vesting. The unamortized portion of deferred compensation expense is recorded as a
reduction of shareholders’ equity. Recipients of DSUs do not have the right to vote such shares and do
not have the right to receive cash dividends. However, they have the right to receive dividends in the
form of additional DSUs. Conditions of vesting are determined at the time of grant. Under the 2004
Plan, unless otherwise stated, DSU’s vest in equal annual installments over four years. However, the
majority of Tyco’s DSU grants vest in equal annual installments over three years.
The Company has granted 2 million DSUs, all of which were outstanding at September 30, 2005.
Employee Stock Purchase Plans—Substantially all full-time employees of the Company’s U.S.
subsidiaries and employees of certain qualified non-U.S. subsidiaries are eligible to participate in an
employee share purchase plan. Eligible employees authorize payroll deductions to be made for the
purchase of shares. The Company matches a portion of the employee contribution by contributing an
134 2005 Financials