ADT 2008 Annual Report Download - page 222

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Acquisitions (Continued)
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.
5. Other Expense, Net
Other expense, net was $224 million in 2008 and $255 million in 2007. Other expense, net in 2008
primarily relates to the loss of $258 million on extinguishment of debt related to the consent
solicitation and exchange offers and termination of the bridge loan facility offset by income of
$6 million recorded in connection with the settlement of its 3.125% convertible senior debentures and
related financial instruments. Refer to Notes 13 and 15. The Company also recorded
other-than-temporary impairments and realized losses on the sale of investments of $6 million related
primarily to investments in corporate debt. Refer to Note 10. Additionally, the Company recorded
$40 million of income as a result of an increase in the receivables due from Covidien and Tyco
Electronics under the Tax Sharing Agreement upon the adoption of Financial Accounting Standards
Board (‘‘FASB’’) Interpretation (‘‘FIN’’) No. 48, ‘‘Accounting for Uncertain Income Taxes—an
interpretation of FASB Statement No. 109.’’ The Company also recorded $6 million of expense for
other activity in accordance with the Tax Sharing Agreement during 2008.
During 2007, other expense, net consisted primarily of a $259 million loss on early extinguishment
of debt incurred in connection with debt tender offers undertaken in connection with the Separation,
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 $388 million allocated to
Covidien and Tyco Electronics and included in discontinued operations.
6. Income Taxes
Significant components of income tax provision for 2008, 2007 and 2006 are as follows ($ in
millions):
2008 2007 2006
Current:
United States:
Federal .................................... $139 $100 $ 62
State ...................................... 4 36 (17)
Non-U.S. .................................... 320 163 339
Current income tax provision ...................... 463 299 384
Deferred:
United States:
Federal .................................... 96 94 78
State ...................................... (5) 3 (8)
Non-U.S. .................................... (219) (72) (150)
Deferred income tax provision ..................... (128) 25 (80)
$ 335 $324 $ 304
2008 Financials 119