ADT 2009 Annual Report Download - page 160

accumulated other comprehensive (loss) income related to these loans, which had no material impact
for fiscal 2009 and $141 million for fiscal 2008.
Interest Rate Exposures
Our long-term debt portfolio primarily consists of fixed-rate instruments. The Company manages
its interest rate risk through the use of interest rate swap transactions with financial institutions acting
as principal counterparties, which were designated as fair value hedges for accounting purposes. During
2009, the Company entered into the interest rate swap transactions with the objective of managing the
exposure to interest rate risk by converting the interest rates on $1.4 billion of fixed-rate debt to
variable rates. In these contracts, the Company agreed with financial institutions acting as principal
counterparties to exchange, at specified intervals, the difference between fixed and floating interest
amounts calculated on an agreed-upon notional principal amount. A 100 basis point increase in interest
rates relative to interest rates as of September 25, 2009 would result in a $22 million net decrease in
the fair value of the contracts. Conversely, a 100 basis point decrease in interest rates relative to
interest rates as of September 25, 2009 would result in a $22 million net increase in the fair value of
the contracts.
Commodity Exposures
We are exposed to volatility in the prices of raw materials used in some of our products and may,
in limited circumstances, enter into hedging contracts to manage those exposures. These exposures are
monitored as an integral part of our risk management program. During 2009, the Company did not
hedge its exposure attributable to changes in commodity prices but may consider such strategies in the
future.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements and schedule specified by this Item, together with
the report thereon of Deloitte & Touche LLP, are presented following Item 15 of this report:
Financial Statements:
Management’s Responsibility for Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the years ended September 25, 2009,
September 26, 2008 and September 28, 2007
Consolidated Balance Sheets as of September 25, 2009 and September 26, 2008
Consolidated Statements of Shareholders’ Equity for the years ended September 25, 2009,
September 26, 2008 and September 28, 2007
Consolidated Statements of Cash Flows for the years ended September 25, 2009,
September 26, 2008 and September 28, 2007
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts
All other financial statements and schedules have been omitted since the information required to
be submitted has been included in the Consolidated Financial Statements and related Notes or because
they are either not applicable or not required under the rules of Regulation S-X.
Information on quarterly results of operations is set forth in Note 24 to the Consolidated Financial
Statements.
68 2009 Financials