ADT 2006 Annual Report Download - page 177

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Acquisitions (Continued)
Cash paid, net of cash acquired, for various other acquisitions totaled $16 million.
During 2004, the Company completed the acquisition of two businesses within Engineered
Products and Services and Fire and Security for an aggregate cost of $9 million.
These acquisitions were funded utilizing cash from operations. The results of operations of the
acquired companies have been included in Tyco’s consolidated results from the respective acquisition
dates. These acquisitions did not have a material effect on the Company’s financial position, results of
operations or cash flows.
Acquisition Liabilities
At September 29, 2006 and September 30, 2005, acquisition liabilities were included in the
Company’s Consolidated Balance Sheets as follows ($ in millions):
2006 2005
Accrued and other current liabilities ................................. $14 $24
Other liabilities ................................................ 26 46
$40 $70
Acquisition liabilities were established in connection with acquisitions in 2002 and prior and relate
primarily to long-term non-cancelable lease obligations. The Company paid $17 million, $30 million and
$54 million to fund acquisition liabilities during 2006, 2005 and 2004, respectively. Of the total cash
paid, $1 million and $2 million was reported in discontinued operations in 2005 and 2004, respectively.
Holdback Liabilities
The Company paid cash of approximately $84 million, $18 million and $53 million during 2006,
2005 and 2004, respectively, relating to holdback liabilities related to certain prior period acquisitions.
Of the total cash paid, $82 million, $0 and $1 million, respectively, was reported in discontinued
operations. Holdback liabilities represent a portion of the purchase price withheld from the seller
pending finalization of the acquisition balance sheet and other contingencies. Certain acquisitions have
provisions that would require Tyco to make additional payments to the sellers if the acquired company
achieves certain milestones subsequent to its acquisition by Tyco. These payments are tied to certain
performance measures, such as revenue, gross margin or earnings growth and are generally treated as
additional purchase price.
At September 29, 2006 and September 30, 2005, holdback liabilities were included in the
Company’s Consolidated Balance Sheets as follows ($ in millions):
2006 2005
Accrued and other current liabilities ................................ $ 23 $ 79
Other liabilities ............................................... 89 69
$112 $148
Approximately $53 million and $134 million of the total holdback liabilities at September 29, 2006
and September 30, 2005, respectively, are retained liabilities of discontinued operations.
2006 Financials 115