ADT 2006 Annual Report Download - page 176

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Impairment of Long-Lived Assets
During 2006 and 2005, there were no significant charges in continuing operations related to the
impairment of long-lived assets.
During 2004, the Company recorded total charges in continuing operations for the impairment of
long-lived assets of $52 million. Fire and Security recorded charges of $34 million primarily related to
the write-down of a United States facility to its estimated fair value, and to a lesser extent, to the
write-off of cash management software. In addition, Corporate, Engineered Products and Services,
Electronics and Healthcare recorded combined charges of $18 million related to the impairment of
property, plant and equipment.
6. Acquisitions
Acquisitions
During 2006, Tyco’s Healthcare segment acquired over 90% ownership in Floreane Medical
Implants, S.A. (‘‘Floreane’’) for approximately $123 million in cash, net of cash acquired of $3 million.
Floreane is an innovator in the development of surgical support implants for parietal, urological and
gynecological surgery. The remaining outstanding shares would be acquired if they become available.
The Company recorded a $3 million in-process research and development charge in conjunction with
the acquisition.
During 2006, Tyco’s Healthcare segment also acquired over 50% ownership of Airox S.A. (‘‘Airox’’)
for approximately $59 million, net of cash acquired of $4 million. Airox is a leading European company
in the home respiratory ventilation systems business. Tyco expects to acquire the remaining Airox
shares in a mandatory tender offer. The initial share purchase and the subsequent tender offer
combined are expected to total approximately $108 million. The Company has also recorded an
$11 million in-process research and development charge in conjunction with the acquisition. The charge
relates to the development of second generation technology which has not yet obtained regulatory
approval. As of the acquisition date, the in-process research and development was not considered to be
technologically feasible or to have any alternative future use.
During 2006, Tyco’s Healthcare segment also acquired Confluent Surgical, Inc. (‘‘Confluent’’). The
total purchase price is expected to be $246 million. As of September 29, 2006, the Company has paid
approximately $200 million in cash, net of cash acquired of $12 million. The Company has also
deposited approximately $34 million of the total purchase price into an escrow account related to
closing balance sheet adjustments and certain indemnifications to be resolved through fiscal 2008. The
Company recorded a $49 million in-process research and development charge in conjunction with the
acquisition related to technology which Confluent is developing for numerous applications across
several surgical disciplines which have not yet received regulatory approval. As of the acquisition date,
the in-process research and development was not considered to be technologically feasible or to have
any alternative future use.
Cash paid for other acquisitions in 2006 totaled $31 million, net of $8 million cash acquired.
In July 2005, Tyco’s Healthcare segment acquired Vivant Medical Inc. (‘‘Vivant’’), a developer of
microwave ablation medical technology. The transaction is valued at approximately $66 million cash,
with up to approximately $35 million additional cash to be paid in the future based on achieving certain
milestones.
114 2006 Financials