ADT 2009 Annual Report Download - page 142

During the third quarter of 2007, we completed the Separation and have presented our Healthcare
and Electronics businesses as discontinued operations in all periods presented.
In each period prior to the Separation, net interest and loss on early extinguishment of debt, which
is included in other expense, net in the Consolidated Statements of Operations, amounts were
proportionally allocated to Covidien and Tyco Electronics based on the debt amounts that we believe
were utilized by Covidien and Tyco Electronics historically inclusive of amounts directly incurred.
Allocated net interest was calculated using our historical weighted-average interest rate on debt
including the impact of interest rate swap agreements. These allocated amounts were included in
discontinued operations. During 2007, allocated interest income, interest expense and other expense,
net was $35 million, $242 million and $388 million, respectively. During 2007, we incurred pre-tax
separation costs related primarily to professional services and employee-related costs of $154 million
and $289 million, respectively, in discontinued operations.
Additionally, the year ended September 28, 2007 includes tax charges related to the Separation
primarily for the write-off of deferred tax assets that are no longer realizable of $88 million in
discontinued operations.
We have used available information to develop our best estimates for certain assets and liabilities
related to the Separation. In limited instances, final determination of the balances will be made in
subsequent periods. During the year ended September 28, 2007, $72 million was recorded through
shareholders’ equity, primarily related to a cash true-up adjustment of $57 million and $15 million of
other items. During the year ended September 26, 2008, $70 million of other items were recorded
through shareholders’ equity. During the year ended September 25, 2009, $43 million was recorded
through shareholders’ equity, $9 million of which related to a pre-Separation income tax filing in a non-
U.S. jurisdiction and $34 million of other items. The other items discussed above, which aggregate
$119 million, reflect immaterial adjustments to shareholders’ equity which were recorded to correct the
distribution amount at the date of Separation. Adjustments in the future for the impact of filing final
income tax returns in certain jurisdictions where those returns include a combination of our, Covidien
and/or Tyco Electronics legal entities and for certain amended income tax returns for the periods prior
to the Separation may be recorded to either shareholders’ equity or the Consolidated Statements of
Operations depending on the specific item giving rise to the adjustment.
Acquisitions
During the year ended September 25, 2009, cash paid for acquisitions totaled $50 million, which
primarily related to the acquisition of Vue Technology, Inc., a provider of radio frequency identification
(‘‘RFID’’) technology, by our Safety Products segment.
During the year ended September 26, 2008, cash paid for acquisitions totaled $401 million, which
primarily related to the acquisition of Winner Security Services LLC (‘‘Winner’’), Sensormatic Security
Corp. (‘‘SSC’’) and First Service Security (‘‘FirstService’’).
During 2007, cash paid for acquisitions totaled $31 million, primarily within our ADT Worldwide,
Safety Products and Flow Control segments.
These acquisitions were funded utilizing cash from operations. The results of operations of the
acquired companies have been included in Tyco’s consolidated results from the respective acquisition
dates. These acquisitions did not have a material effect on the Company’s financial position, results of
operations or cash flows.
For a detailed discussion of acquisitions, see Note 4 to the Consolidated Financial Statements.
50 2009 Financials