ADT 2006 Annual Report Download - page 184

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Goodwill and Intangible Assets (Continued)
accumulated amortization of the Company’s intangible assets at September 29, 2006 and September 30,
2005 ($ in millions):
September 29, 2006 September 30, 2005
Gross Weighted Average Gross Weighted Average
Carrying Accumulated Amortization Carrying Accumulated Amortization
Amount Amortization Period Amount Amortization Period
Amortizable:
Contracts and related
customer relationships .... $5,319 $3,046 12 years $4,974 $2,638 12 years
Intellectual property ....... 3,213 1,169 20 years 2,921 992 20 years
Other .................. 200 70 28 years 211 70 27 years
Total .................... $8,732 $4,285 16 years $8,106 $3,700 16 years
Non-Amortizable:
Intellectual property ....... $ 653 $ 652
Other .................. 28 27
Total .................... $ 681 $ 679
Intangible asset amortization expense for 2006, 2005 and 2004 was $650 million, $653 million and
$691 million, respectively. The estimated aggregate amortization expense on intangible assets currently
owned by the Company is expected to be approximately $650 million for 2007, $550 million for 2008,
$500 million for 2009, $400 million for 2010 and $350 million for 2011.
14. Related Party Transactions
The Company has amounts due related to loans and advances issued to employees in prior years
under the Company’s Key Employee Loan Program, relocation programs and other advances made to
executives. Loans were provided to employees under the Company’s Key Employee Loan Program,
which is now discontinued except for outstanding loans for the payment of taxes upon the vesting of
shares granted under our Restricted Share Ownership Plans. The loans are not collateralized and bear
interest, payable annually, at a rate based on the six-month LIBOR, calculated annually as the average
of the 12 rates in effect on the first day of the month. Loans are generally repayable in ten years;
however, earlier payments are required under certain circumstances, such as when an employee is
terminated. In addition, the Company made mortgage loans to certain employees under employee
relocation programs. These loans are generally payable in 15 years and are collateralized by the
underlying property. During 2006 and 2005, the maximum amount outstanding under these programs
was $69 million and $70 million, respectively. Loans receivable under these programs, as well as other
unsecured advances outstanding, were $52 million and $68 million at September 29, 2006 and
September 30, 2005. The total outstanding loans receivable includes loans to L. Dennis Kozlowski, the
Company’s former Chairman and Chief Executive Officer (until June 2002). The amount outstanding
under these loans, plus accrued interest, was $52 million and $49 million at September 29, 2006 and
September 30, 2005, respectively, and the rate of interest charged on such loans was 5.0% and 3.2% for
2006 and 2005, respectively. Interest income on these interest bearing loans totaled $2 million,
$2 million, and $1 million in 2006, 2005 and 2004, respectively. Certain of the above loans totaling
$30 million and $20 million at September 29, 2006 and September 30, 2005, respectively, are
122 2006 Financials