ADT 2006 Annual Report Download - page 130

put on the market on or prior to August 13, 2005) remains with the commercial user until the
equipment is replaced, at which time the waste management obligation may be transferred to the
producer of the replacement equipment. FSP No. 143-1 is effective for the first reporting period ending
after June 8, 2005 or the date of the adoption of the WEEE Directive into law by the applicable
European Union member country. The financial statement impact depends heavily on the respective
laws and regulations adopted by the EU member countries, their implementation guidance and the type
of recycling programs and systems that are established. The Company evaluated the effects of FSP
No. 143-1 and determined that it did not have a material impact on the Company’s results of
operations, financial position or cash flows.
Recently Issued Accounting Pronouncements—In September 2006, the FASB issued SFAS No. 158,
‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of
FASB Statements No. 87, 88, 106 and 132(R).’’ SFAS No. 158 requires that employers recognize the
funded status of defined benefit pension and other postretirement benefit plans as a net asset or
liability on the balance sheet and recognize as a component of other comprehensive income, net of tax,
the gains or losses and prior service costs or credits that arise during the period but are not recognized
as a component of net periodic benefit cost. Under SFAS No. 158, companies are required to measure
plan assets and benefit obligations as of their fiscal year end. The Company presently uses a
measurement date of August 31st. SFAS No. 158 also requires additional disclosure in the notes to the
financial statements. The recognition provisions of SFAS No. 158 are effective for fiscal 2007, while the
measurement date provisions become effective in fiscal 2009. The Company is currently assessing the
impact of SFAS No. 158 on its consolidated financial statements. Based on the funded status of defined
benefit and other postretirement plans as of September 29, 2006, the Company estimates that it would
recognize a net $356 million liability through a reduction in shareholders’ equity. The ultimate amounts
recorded are highly dependent on various estimates and assumptions including, among other things, the
discount rate selected, future compensation levels and performance of plan assets. Changes in these
assumptions could increase or decrease the estimated impact of implementing SFAS No. 158.
In September 2006, the FASB issued SFAS No. 157, ‘‘Fair Value Measurements,’’ which enhances
existing guidance for measuring assets and liabilities at fair value. SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosure about fair value
measurements. SFAS No. 157 is effective for Tyco beginning September 29, 2008. The Company is
currently assessing the impact, if any, that SFAS No. 157 will have on the results of its operations,
financial position or cash flows.
In September 2006, the SEC issued Staff Accounting Bulletin (‘‘SAB’’) No. 108, ‘‘Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statement.’’
SAB No. 108 requires that companies utilize a ‘‘dual-approach’’ to assessing the quantitative effects of
financial statement misstatements. The dual approach includes both an income statement focused and
balance sheet focused assessment. SAB No. 108 is applicable for Tyco’s fiscal year ending
September 28, 2007. The Company is currently assessing the impact of the adoption of SAB No. 108,
but does not expect that it will have a significant impact on its financial position or results of
operations.
In June 2006, the FASB issued FIN No. 48, ‘‘Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109.’’ This Interpretation prescribes a comprehensive model for
the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns. FIN No. 48 is effective for Tyco in the first
quarter of fiscal 2008. The Company is currently assessing the impact that FIN No. 48 will have on the
results of its operations, financial position or cash flows.
68 2006 Financials