ADT 2007 Annual Report Download - page 202

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
$71 million, $866 million and $158 million for 2007, 2006 and 2005, respectively. All prior periods have
been reclassified to conform to the current period presentation.
Recently Adopted Accounting Pronouncements—In September 2006, the Financial Accounting
Standards Board (‘‘FASB’’) issued SFAS No. 158, ‘‘Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R).’’ SFAS
No. 158 requires that employers recognize the funded status of defined benefit pension and other
postretirement benefit plans as a net asset or liability on the balance sheet and recognize as a
component of other comprehensive income, net of tax, the gains or losses and prior service costs or
credits that arise during the period but are not recognized as a component of net periodic benefit cost.
Under SFAS No. 158, companies are required to measure plan assets and benefit obligations as of their
fiscal year end. The Company presently uses a measurement date of August 31st. SFAS No. 158 also
requires additional disclosure in the notes to the financial statements. The recognition provisions of
SFAS No. 158 are effective for fiscal 2007, while the measurement date provisions become effective in
fiscal 2009. The Company adopted the recognition and disclosure provisions of SFAS No. 158 as of
September 28, 2007. The Company recognized a net $111 million liability through a reduction in
shareholders’ equity.
In September 2006, the Securities and Exchange Commission (‘‘SEC’’) issued Staff Accounting
Bulletin (‘‘SAB’’) No. 108, ‘‘Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.’’ SAB No. 108 requires that companies utilize a
‘‘dual approach’’ in assessing the quantitative effects of financial statement misstatements. The dual
approach includes both an income statement focused and balance sheet focused assessment. SAB
No. 108 is effective for Tyco in fiscal 2007. The implementation of SAB No. 108 did not have a
material impact on Tyco’s results of operations, financial position or cash flows.
Recently Issued Accounting Pronouncements—In February 2007, the FASB issued Statement of
Financial Accounting Standards (‘‘SFAS’’) No. 159, ‘‘The Fair Value Option for Financial Assets and
Financial Liabilities.’’ SFAS No. 159 permits an entity, on a contract-by-contract basis, to make an
irrevocable election to account for certain types of financial instruments and warranty and insurance
contracts at fair value, rather than historical cost, with changes in the fair value, whether realized or
unrealized, recognized in earnings. SFAS No. 159 is effective for Tyco in the first quarter of fiscal 2009.
The Company is currently assessing the impact that SFAS No. 159 will have on the results of its
operations, financial position or cash flows.
In September 2006, the FASB issued SFAS No. 157, ‘‘Fair Value Measurements,’’ which enhances
existing guidance for measuring assets and liabilities at fair value. SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosure about fair value
measurements. SFAS No. 157 is effective for Tyco beginning in fiscal 2009. The Company is currently
assessing the impact, if any, that SFAS No. 157 will have on the results of its operations, financial
position or cash flows.
In June 2006, the FASB issued Financial Accounting Standards Board Interpretation (‘‘FIN’’)
No. 48, ‘‘Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.’’ This
Interpretation prescribes a comprehensive model for the financial statement recognition, measurement,
presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax
returns. FIN No. 48 is effective for Tyco in the first quarter of fiscal 2008. The Company is currently
implementing and assessing the expected impact of adopting FIN No. 48. Based on the assessment to
110 2007 Financials