ADT 2007 Annual Report Download - page 213

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Cumulative Effect of Accounting Change (Continued)
Financial Statements under the accelerated reporting deadlines. As a result of this change, the
Company recorded a $21 million after-tax gain ($28 million pre-tax) cumulative effect of accounting
change.
8. Earnings Per Share
As discussed in Note 1, the Company effected a reverse stock split of Tyco’s common shares, at a
split ratio of one for four. Share and per share data for all periods presented have been adjusted to
reflect the reverse stock split.
The reconciliations between basic and diluted earnings per share for 2007, and 2006 and 2005 are
as follows ($ in millions, except per share data):
2007 2006 2005
Per Share Per Share Per Share
Loss Shares Amount Income Shares Amount Income Shares Amount
Basic earnings per share:
(Loss) income from continuing
operations .............. $(2,519) 495 $(5.09) $823 503 $1.64 $581 503 $1.15
Share options, restricted share
awards and deferred stock units . — — — 4 — 4
Exchange of convertible debt .... — — 12 14 30 35
Diluted earnings per share:
(Loss) income from continuing
operations, giving effect to
dilutive adjustments ........ $(2,519) 495 $(5.09) $835 521 $1.60 $611 542 $1.13
The computation of diluted earnings per share prior to the Separation, includes the impact of
equity instruments which were converted to give effect to the distribution, in 2007, 2006 and 2005
excludes the effect of the potential exercise of options to purchase approximately 29 million, 21 million
and 18 million shares, respectively, because the effect would be anti-dilutive. Additionally, the
computation of diluted earnings per common share for 2007 excludes the impact of convertible debt of
approximately 6 million shares because the effect would be anti-dilutive.
The computation of diluted earnings per share in 2007 excludes restricted share awards and
deferred stock units of approximately 5 million because the effect would be anti-dilutive. The
computation of diluted earnings per share in 2006 and 2005 excludes restricted share awards of
approximately 2 million and 1 million, respectively, because the effect would be anti-dilutive.
9. Sale of Accounts Receivable
Certain of Tyco’s international businesses utilize the sale of accounts receivable as short-term
financing mechanisms. The aggregate amount outstanding under the Company’s remaining international
accounts receivable programs was $76 million, $75 million and $79 million at September 28, 2007,
September 29, 2006 and September 30, 2005, respectively.
10. Investments
At September 28, 2007 and September 29, 2006, Tyco had available-for-sale investments with a fair
market value of $352 million and $334 million and a cost basis of $352 million and $337 million,
2007 Financials 121