ADT 2009 Annual Report Download - page 193

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Divestitures (Continued)
During April 2008, the Company sold Ancon, a manufacturer of stainless steel products used in
masonry construction. Ancon was part of the Company’s Corporate and Other segment. The sale was
completed for $164 million in net cash proceeds and a pre-tax gain of $100 million was recorded which
was largely exempt from tax. 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. During the fourth quarter of 2008, the Company received an additional $6 million
of proceeds related to the sale of Ancon.
During February 2008, the Company sold NDC, a company in the Japanese fire protection
industry. NDC was part of the Company’s Fire Protection Services and Safety Products segments. The
sale was completed for $50 million in net cash proceeds and a pre-tax gain of $7 million was recorded.
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.
During January 2008, the Company sold a European manufacturer of public address products and
acoustic systems, which was part of the Company’s Fire Protection Services Segment and recorded an
$8 million pre-tax loss on sale. The loss was recorded in income from discontinued operations, net of
income taxes in the Company’s Consolidated Statements of Operations.
During the first quarter of 2007, Aquas Industriales de Jose, C.A. (‘‘AIJ’’), a joint venture that was
majority owned by Infrastructure Services, was sold for $42 million in net cash proceeds and a pre-tax
gain of $19 million was recorded. The gain was recorded in discontinued operations, net of income
taxes in the Company’s Consolidated Statements of Operations. AIJ was part of the Company’s
Corporate and Other segment.
During the third quarter of 2007, Tyco completed the Separation and has presented its 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 Tyco believes
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, the Company 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.
The Company has used available information to develop its 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
2009 Financials 101