ADT 2009 Annual Report Download - page 192

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Divestitures (Continued)
Discontinued Operations
As previously reported in Tyco’s periodic filings, in July 2008, the Company substantially completed
the sale of its Infrastructure Services business, which met the criteria to be presented as discontinued
operations. In order to complete the sale of Earth Tech Brasil Ltda. (‘‘ET Brasil’’) and Earth Tech UK
businesses and certain assets in China, the Company was required to obtain consents and approvals to
transfer the legal ownership of the business and assets. On January 22, 2009, the Company received the
necessary consents and approvals to transfer the legal ownership of its ET Brasil business to Carioca
Christiani-Nielsen Engenharia S.A. and received cash proceeds of $13 million. During the fourth
quarter of 2008, the Company sold its Earth Tech UK business and received net cash proceeds of
$53 million. However, the gain was deferred until receipt of the necessary consents and approvals. On
May 12, 2009, the Company received the necessary consents and approvals to transfer the legal
ownership of its Earth Tech UK business to AECOM Technologies Corporation (‘‘AECOM’’) and
realized the deferred gain in the Company’s Consolidated Statements of Operations during the third
quarter of 2009. Furthermore, on February 27, 2009, the Company received the necessary consents to
transfer certain of the China assets and received cash proceeds of $18 million. On May 8, 2009, the
Company received the necessary consents to transfer additional China assets and received cash
proceeds of $6 million. On July 2, 2009, the Company received the necessary consents and approvals to
transfer the remaining assets in China and received cash proceeds of $24 million. As a result of the
fiscal 2009 dispositions, a net pre-tax gain of $33 million was recorded in income from discontinued
operations, net of income taxes in the Company’s Consolidated Statements of Operations for the year
ended September 25, 2009.
During 2008, the Company sold its Empresa de Transmissao de Energia do Oeste Ltda. (‘‘ETEO’’)
business, Ancon Building Products (‘‘Ancon’’) business, Nippon Dry-Chemical Co., Ltd. (‘‘NDC’’)
business, and a European manufacturer of public address products and acoustic systems. As discussed
above, the Company substantially completed the sale of its Infrastructure Services Business, during the
fourth quarter of 2008. These businesses met the held for sale and discontinued operations criteria and
have been included in discontinued operations in all periods presented.
In May 2008, the Company sold 100% of the stock of ETEO, a Brazilian subsidiary of the
Company’s Infrastructure Services business for $338 million of net cash proceeds and recorded a
pre-tax gain of $232 million, including the effects of the economic hedge of the purchase price
discussed below. The gain was recorded in income from discontinued operations, net of income taxes in
the Company’s Consolidated Statements of Operations for the year ended September 26, 2008. ETEO
was part of the Company’s Corporate and Other segment. During September 2007, Tyco entered into
an economic hedge of the Brazilian Real denominated contractual sale price of the ETEO business.
Since the hedging transaction was directly linked to the proceeds from the sale of a business that was
reflected in discontinued operations, Tyco began including the impact of the hedge in discontinued
operations during the first quarter of 2008. During the third quarter of 2008, Tyco incurred a pre-tax
loss of $36 million on this hedge. The impact of the hedge in 2007 was not material.
Additionally in fiscal year 2008, the Company settled a contract dispute arising under its former
Infrastructure Services business. In connection with the settlement, the Company assessed its assets
under the original contract and concluded the assets were no longer recoverable, resulting in a
$51 million charge to discontinued operations.
100 2009 Financials