ADT 2006 Annual Report Download - page 63

PART I
Item 1. Business
General
Tyco International Ltd. (‘‘we,’’ ‘‘Tyco’’ or the ‘‘Company’’) is a diversified manufacturing and
service company that, through its subsidiaries:
• designs, manufactures and distributes electrical and electronic components and related solutions;
• designs, manufactures, installs, monitors and services electronic security and fire protection
systems;
• designs, manufactures and distributes medical devices and supplies, imaging agents,
pharmaceuticals and adult incontinence and infant care products; and
• designs, manufactures, distributes and services engineered products, including industrial valves
and controls, as well as steel tubular goods, and provides consulting, engineering and
construction management and operating services.
Tyco International Ltd., which is organized under the laws of Bermuda, was created as a result of
the July 1997 acquisition of Tyco International Ltd., a Massachusetts corporation, by ADT Limited, a
public company organized under the laws of Bermuda, at which time ADT Limited changed its name
to Tyco International Ltd.
Unless otherwise indicated, references in this Annual Report to 2006, 2005 and 2004 are to Tyco’s
fiscal year ended September 29, 2006, September 30, 2005 and September 30, 2004, respectively.
Strategy
As previously reported in our periodic filings, on January 13, 2006, the Company announced that
its Board of Directors approved a plan to separate the Company into three separate, publicly traded
companies—Tyco Healthcare, one of the world’s leading diversified healthcare companies; Tyco
Electronics, the world’s largest passive electronic components manufacturer; and a combination of Tyco
Fire and Security and Engineered Products and Services, a global business with leading positions in
residential and commercial security, fire protection and industrial products and services (the ‘‘Proposed
Separation’’). After thorough reviews of strategic options with our Board of Directors, we believe that
this strategy is the best way to position our market-leading companies for sustained growth and value
creation.
Consummation of the Proposed Separation is subject to certain conditions, including final approval
by the Tyco Board of Directors, receipt of certain tax rulings, necessary opinions of counsel, the filing
and effectiveness of registration statements with the Securities and Exchange Commission (‘‘SEC’’) and
the completion of any necessary debt refinancings. Approval by the Company’s shareholders is not
required as a condition to the consummation of the Proposed Separation. Tyco has received an initial
private letter ruling from the Internal Revenue Service (‘‘IRS’’) regarding the U.S. federal income tax
consequences of the Proposed Separation noting it will qualify for favorable tax treatment. Tyco expects
to file Registration Statements in connection with the Proposed Separation during the second quarter
of 2007. Following the Proposed Separation, Tyco’s shareholders will own 100% of the equity in all
three companies through tax-free stock dividends.
We are also focused on growing profitability within each of these companies so that each may be
well positioned for long-term growth as independent businesses. Following the Proposed Separation, we
expect that all three companies will be dividend-paying companies. As we prepare for the Proposed
Separation, we remain committed to returning excess cash to shareholders and will complete the
2006 Financials 1