ADT 2008 Annual Report Download - page 162

these allocations. The following represents preliminary purchase price allocations for the acquired
businesses ($ in million):
Net working capital and other assets ............................... $ 21
Property, plant and equipment, net ................................ 7
Goodwill ................................................... 140
Intangible assets, net .......................................... 170
Purchase price .............................................. $338
Payments relating to the reacquisition of unfavorable franchise rights and
legal settlement ............................................ 64
Aggregate amount paid ........................................ $402
Acquisition Liabilities
At September 26, 2008 and September 28, 2007, acquisition liabilities were included in the
Company’s Consolidated Balance Sheets as follows ($ in millions):
2008 2007
Accrued and other current liabilities ........................... $ 3 $ 4
Other liabilities .......................................... 9 10
$12 $14
Acquisition liabilities relate to facility exit costs, employee severance and benefits, distributor and
supplier cancellation fees and other costs. The Company paid $2 million, $5 million and $5 million to
fund acquisition liabilities during 2008, 2007 and 2006, respectively.
Holdback Liabilities
The Company paid cash of approximately $5 million and $2 million during 2007 and 2006,
respectively, relating to holdback liabilities related to certain prior period acquisitions. There were no
such payments in 2008. Holdback liabilities represent a portion of the purchase price withheld from the
seller pending finalization of the acquisition balance sheet and other contingencies.
At September 26, 2008 and September 28, 2007, holdback liabilities were included in the
Company’s Consolidated Balance Sheets as follows ($ in millions):
2008 2007
Other liabilities .......................................... $18 $16
ADT Dealer Program
During 2008, 2007 and 2006, Tyco paid $376 million, $409 million and $373 million of cash,
respectively, to acquire approximately 370,000, 415,000 and 401,000 customer contracts for electronic
security services through the ADT dealer program.
Goodwill Impairment
Annually and more frequently if triggering events occur, the Company tests goodwill for
impairment by comparing the fair value of each reporting unit with its carrying amount. Fair value for
the goodwill impairment test is determined utilizing a discounted cash flow analysis based on the
Company’s future budgets discounted using the Company’s weighted average cost of capital and market
indicators of terminal year cash flows. Other valuation methods are used to corroborate the discounted
2008 Financials 59