ADT 2006 Annual Report Download - page 159

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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation, Restatement and Summary of Significant Accounting Policies (Continued)
Review of Equity Plan Compliance
Separately, the Company identified an error related to the recognition of compensation expense
under the Company’s employee stock purchase program in the United Kingdom. The aggregate
compensation expense related to this item which the Company should have recorded in 2002-2005 is
$29 million pre-tax and $20 million after-tax. None of this amount relates to 2006, $7 million pre-tax
($5 million after-tax) relates to 2005 and $19 million pre-tax ($13 million after-tax) relates to 2004.
Effect of Restatement
Taken together, these prior period errors result in an aggregate understatement of compensation
expense of $281 million pre-tax and $193 million after-tax. Based on the findings of the items discussed
above, the Company has restated its reported results for prior periods to reflect the impact of
additional stock-based compensation expense in Corporate. See Note 23.
The impact on the Consolidated Statements of Income for the years ended September 30, 2005
and 2004, and the Consolidated Balance Sheet as of September 30, 2005, as a result of the above
restatement, is summarized in the tables below. There was no impact on total cash flows from
operating, investing or financing activities within the Consolidated Statements of Cash Flows for the
years ended September 30, 2005 and 2004. The amounts previously reported are derived from the
97
2006 Financials