ADT 2007 Annual Report Download - page 209

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Other Expense, Net
Other expense, net was $255 million in 2007 and $296 million in 2005. During 2007, other expense,
net consisted primarily of a $259 million loss on early extinguishment of debt incurred in connection
with the debt tender offers (see Note 13), for which no tax benefit is available. This charge consists
primarily of premiums paid and the write-off of unamortized debt issuance costs and discounts. The
total loss on early extinguishment of debt was $647 million, with $259 million included in continuing
operations and $388 million allocated to Covidien and Tyco Electronics and included in discontinued
operations.
During 2005, other expense, net consisted primarily of losses related to the repurchase of
outstanding convertible debt prior to its scheduled maturity, partially offset by a $109 million court-
ordered restitution award.
During 2005, the Company repurchased $1,241 million principal amount of its outstanding 2.75%
convertible senior debentures for $1,823 million and $750 million principal amount of its outstanding
3.125% convertible senior debentures for $1,147 million. These repurchases resulted in a $1,013 million
loss on the retirement of debt, including the write-off of unamortized debt issuance costs, with $405
included in continuing operations and $608 million allocated to Covidien and Tyco Electronics and
included in discontinued operations.
Additionally, in September 2005, we were awarded a total of $134 million as restitution in
connection with our litigation against Mr. L. Dennis Kozlowski, our former Chairman and Chief
Executive Officer, and Mr. Mark H. Swartz, our former Chief Financial Officer and Director. The
restitution award is comprised of $109 million of previously expensed compensation made to the
Defendants and reported as other expense, net in prior years and $25 million related to a loan
receivable from Mr. L. Dennis Kozlowski which had been reflected in the Company’s Consolidated
Financial Statements as a receivable. During 2007, the Company received payment for these amounts.
6. Income Taxes
Significant components of income tax provision for 2007, 2006 and 2005 are as follows ($ in
millions):
2007 2006 2005
Current:
United States:
Federal .................................... $100 $ 62 $(123)
State ...................................... 36 (17) 7
Non-U.S. .................................... 171 345 222
Current income tax provision ...................... 307 390 106
Deferred:
United States:
Federal .................................... 96 78 56
State ...................................... 3 (8) (27)
Non-U.S. .................................... (72) (150) (106)
Deferred income tax provision ..................... 27 (80) (77)
$ 334 $ 310 $ 29
2007 Financials 117