ADT 2007 Annual Report Download - page 249

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Share Plans (Continued)
Employee Stock Purchase Plans—Substantially all full-time employees of the Company’s U.S.
subsidiaries and employees of certain qualified non-U.S. subsidiaries are eligible to participate in an
employee share purchase plan. Eligible employees authorize payroll deductions to be made for the
purchase of shares. The Company matches a portion of the employee contribution by contributing an
additional 15% of the employee’s payroll deduction. All shares purchased under the plan are purchased
on the open market by a designated broker.
Under the SAYE Plan, eligible employees in the United Kingdom are granted options to purchase
shares at the end of three years of service at 85% of the market price at the time of grant. Options
under the SAYE Plan are generally exercisable after a period of three years and expire six months after
the date of vesting. The SAYE Plan provides for a maximum of 10 million common shares to be issued;
as of September 28, 2007, there were 7 million shares available for future issuance. All of the shares
purchased under the SAYE Plan are purchased on the open market.
A summary of option activity under the SAYE Plan as of September 28, 2007 and changes during
the year then ended is presented below:
Weighted- Aggregate
Average Intrinsic
Weighted- Remaining Value
Average Contractual Term (in
Shares Exercise Price (in years) millions)
Outstanding at September 29, 2006 ......... 1,361,740 $22.99
Exercised ........................... (402,276) 23.15
Expired ............................. (98,909) 20.03
Forfeited ............................ (125,695) 23.04
Outstanding at September 28, 2007 ......... 734,860 23.30 1.6 $ 15
Vested and unvested expected to vest at
September 28, 2007 .................. 699,167 23.36 1.6 15
Exercisable at September 28, 2007 ......... 33,072 23.88 — 1
The grant-date-fair value of each option grant is estimated using the Black-Scholes option pricing
model. Assumptions for expected volatility, the average expected life, and the risk-free rate were made
using the same methodology as previously described under Share Options.
The weighted-average grant-date fair values of options granted under the SAYE Plan during 2006
and 2005 was $8.80, and $12.65, respectively. The total intrinsic value of options exercised during 2007,
2006 and 2005 was $5 million, $24 million and $3 million, respectively. The related excess cash tax
benefit classified as a financing cash inflow for 2007 and 2006 was not significant.
As of September 28, 2007, there was $2 million in total unrecognized compensation cost related to
non-vested options granted under the SAYE Plan. The cost is expected to be recognized over a period
of 1.3 fiscal years.
2007 Financials 157