ADT 2009 Annual Report Download - page 146

pension benefit obligations. A 25 basis point decrease in the discount rate would increase our present
value of pension obligations by approximately $77 million. We consider the current and expected asset
allocations of our pension plans, as well as historical and expected long-term rates of return on those
types of plan assets, in determining the expected long-term return on plan assets. A 50 basis point
decrease in the expected long-term return on plan assets would increase our pension expense by
approximately $7 million. For fiscal 2010, we expect that recent declines in interest rates will increase
our pension expense, but is not expected to materially increase required contributions.
Liquidity and Capital Resources
On September 30, 2009, Tyco International Finance S.A. (‘‘TIFSA’’) issued $500 million aggregate
principle amount of 4.125% notes due 2014 (the ‘‘2014 notes’’), which are fully and unconditionally
guaranteed by the Company. TIFSA received net proceeds of approximately $496 million after
underwriting discounts and estimated offering expenses.
On January 9, 2009, TIFSA issued $750 million aggregate principle amount of 8.5% notes due on
January 15, 2019, which are fully and unconditionally guaranteed by the Company (the ‘‘2019 notes’’).
Additionally, the holders of the 2019 notes have the right to require the Company to repurchase all or
a portion of the 2019 Notes on July 15, 2014 at a purchase price equal to 100% of the principal
amount of the notes tendered, plus accrued and unpaid interest. Otherwise, the 2019 notes mature on
January 15, 2019. TIFSA received net proceeds of approximately $745 million after underwriting
discounts and offering expenses.
The net proceeds of the aforementioned offerings may be used for general corporate purposes,
which may include repayment of indebtedness, acquisitions, additions to working capital, repurchase of
common shares, capital expenditures and investments in the Company’s subsidiaries.
In January 2009, TIFSA made a payment of $215 million to extinguish all of its 6.125% notes due
2009. Additionally, in November 2008, TIFSA made a payment of $300 million to extinguish all of its
6.125% notes due 2008.
Additionally, in January 2009, we repaid the entire outstanding balance of $686 million on our
revolving credit facilities. As of September 25, 2009, there were no amounts drawn under our revolving
credit facilities. As of September 25, 2009, the aggregate available commitment under our senior
revolving credit facilities was $1.69 billion, $200 million of which was dedicated to backstop all of our
commercial paper outstanding as of such date. We continually monitor developments regarding the
availability of funds under our revolving credit facilities. Although there is some risk that financial
institutions will fail to perform their contractual obligations, particularly in times of credit market
distress, we believe that the lenders under our revolving credit facilities are capable of meeting any
borrowing requests we may make for the foreseeable future.
As discussed above, as of September 25, 2009, we had $200 million of commercial paper
outstanding. We continue to experience increased availability within the commercial paper markets.
Our multi-year revolving credit facilities serve as a backstop to our commercial paper program.
In addition to our available cash and operating cash flows, additional sources of potential liquidity
include committed credit lines, our commercial paper program, public debt and equity markets as well
as the ability to sell trade accounts receivable. We continue to balance our operating, investing and
financing uses of cash through investment in our existing core businesses, strategic acquisitions and
divestitures, dividends and share repurchases. We believe our cash position, amounts available under
our credit facilities and cash provided by operating activities will be adequate to cover our operational
and business needs.
As a result of recent declines in interest rates during 2009, pension costs may increase in fiscal
2010. We will continue to monitor market conditions and assess the impact, if any, on our financial
position, results of operations or cash flows. Approximately 100% of our U.S. and more than 95% of
our non-U.S. funded pension plans are invested in marketable investments, including publicly-traded
54 2009 Financials