ADT 2006 Annual Report Download - page 182

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Earnings Per Share
The reconciliations between basic and diluted earnings per share for 2006, and 2005 and 2004, as
restated, are as follows ($ in millions, except per share data):
2006 2005 2004
Per Share Per Share Per Share
Income Shares Amount Income Shares Amount Income Shares Amount
(Restated) (Restated) (Restated) (Restated) (Restated)
Basic earnings per share:
Income from continuing
operations ......... $4,075 2,010 $2.03 $3,044 2,012 $1.51 $2,869 2,001 $1.43
Share options, restricted
share awards and
deferred stock units . . — 16 — 17 — 14
Exchange of convertible
debt ............. 31 58 74 138 113 205
Diluted earnings per
share:
Income from continuing
operations, giving
effect to dilutive
adjustments ........ $4,106 2,084 $1.97 $3,118 2,167 $1.44 $2,982 2,220 $1.34
The computation of diluted earnings per share in 2006, 2005 and 2004 excludes the effect of the
potential exercise of options to purchase approximately 85 million, 72 million and 67 million shares,
respectively, because the effect would be anti-dilutive.
The computation of diluted earnings per share in 2006 and 2005 excludes restricted share awards
of approximately 6 million and 2 million, respectively, because the effect would be anti-dilutive.
11. Sale of Accounts Receivable
Historically, Tyco utilized several programs under which it sold participating interests in accounts
receivable to investors who, in turn, purchased and received ownership and security interests in those
receivables. These transactions qualified as true sales. The sale proceeds were less than the face
amount of accounts receivable sold, and the discount from the face amount was included in selling,
general and administrative expenses in the Consolidated Statements of Income. Such discount
aggregated $18 million, or 3.1% of the weighted-average balance of the receivables outstanding, during
2004.
During 2004, the Company reduced outstanding balances under its accounts receivable programs
by $929 million, of which $812 million related to its corporate accounts receivable programs which were
terminated in 2005. No amounts were utilized under these programs at September 30, 2004, and
through the date of termination. The remaining reduction of $117 million related to certain of the
Company’s international businesses selling fewer accounts receivable as a short-term financing
mechanism. The aggregate amount outstanding under the remaining international accounts receivable
programs was $75 million and $80 million at September 29, 2006 and September 30, 2005, respectively.
120 2006 Financials