ADT 2006 Annual Report Download - page 121

During 2006, we paid $413 million related to acquisitions of businesses, net of cash acquired,
including a net $200 million and a net $123 million related to the previously discussed acquisitions of
Confluent and Floreane, respectively, within Tyco’s Healthcare segment.
We continue to fund capital expenditures to improve the cost structure of our businesses, to invest
in new processes and technology, and to maintain high quality production standards. Capital spending
increased to $1.6 billion in 2006 from $1.4 billion in 2005. The level of capital expenditures in 2007 is
expected to exceed spending levels in 2006 and is also expected to exceed depreciation. In
October 2006, the Company exercised its right to buy five cable laying sea vessels that were previously
included under an off-balance sheet leasing arrangement for $280 million. This cash paid will be
included in capital expenditures for 2007.
Income taxes paid, net of refunds, during the year was $862 million.
During 2006, we repurchased 95 million of our common shares for $2.5 billion, completing the
$1.5 billion share repurchase program previously approved by the Board of Directors in July 2005 and
continuing the new $2.0 billion share repurchase program approved by the Board of Directors in
May 2006.
During 2006, 2005 and 2004, Tyco paid $373 million, $328 million and $254 million of cash,
respectively, to acquire approximately 401,000, 364,000 and 302,000 customer contracts for electronic
security services through the ADT dealer program.
During 2006, 2005 and 2004 we paid out $68 million, $171 million and $266 million, respectively,
in cash related to restructuring activities. These amounts include $7 million, $16 million and
$43 million, respectively, reported in discontinued operations. See Note 4 to our Consolidated Financial
Statements for further information regarding our restructuring activities. Subsequent to year end, we
launched a $600 million company-wide restructuring program. We expect to incur approximately
$500 million of charges in 2007, and we expect that the total cash expenditures for this program will be
approximately $450 million, of which $250 million is expected in 2007.
During 2006, 2005 and 2004, we paid $101 million, $48 million and $107 million, respectively, in
cash for purchase accounting and holdback liabilities. Of the total cash paid, $82 million, $1 million and
$3 million, respectively, was reported in discontinued operations. Holdback liabilities represent a
portion of the purchase price withheld from the seller pending finalization of the acquisition balance
sheet and other contingencies. At September 29, 2006 holdback liabilities on our Consolidated Balance
Sheets were $112 million, of which $23 million are included in accrued and other current liabilities and
$89 million are included in other liabilities. At September 29, 2006, $40 million of acquisition liabilities
remained on our Consolidated Balance Sheets, of which $14 million are included in accrued and other
current liabilities and $26 million are included in other liabilities.
As previously mentioned, in January 2006, the Company announced that its Board of Directors
approved a plan to separate the Company into three separate, publicly traded companies. In connection
with the Proposed Separation, we paid $96 million in separation costs during 2006. We expect that,
during 2007, we will incur the remaining cash outflows related to the Proposed Separation which will be
largely attributable to tax restructuring, debt refinancing, professional services and employee-related
costs.
In October 2006, the Company completed the sale of its PCG business, which was part of the
Electronics segment, for $226 million and expects to record a gain on the sale of approximately
$45 million.
2006 Financials 59