ADT 2009 Annual Report Download - page 200

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Other Expense, Net
Other expense, net was $7 million in 2009 compared to $224 million in 2008 and $255 million in
2007. Other expense, net in 2009 primarily relates to a $14 million charge recorded as a result of a
decrease in the receivables due from Covidien and Tyco Electronics under the Tax Sharing Agreement,
which was partially offset by income of $5 million relating to a gain on derivative contracts used to
economically hedge the foreign currency risk related to the Swiss franc denominated dividends.
Other expense, net during 2008, includes $258 million on extinguishment of debt related to the
consent solicitation and exchange offers and termination of the bridge loan facility offset by income of
$6 million recorded in connection with the settlement of its 3.125% convertible senior debentures and
related financial instruments. See Notes 12 and 14. The Company also recorded other-than-temporary
impairments and realized losses on the sale of investments of $6 million related primarily to
investments in corporate debt. See Note 9. Additionally, the Company recorded $40 million of income
as a result of an increase in the receivables due from Covidien and Tyco Electronics under the Tax
Sharing Agreement in connection with the adoption of the guidance pertaining to the accounting for
uncertain income taxes. The Company also recorded $6 million of expense for other activity in
accordance with the Tax Sharing Agreement during 2008.
During 2007, other expense, net consisted primarily of a $259 million loss on early extinguishment
of debt incurred in connection with debt tender offers undertaken in connection with the Separation,
for which no tax benefit is available. This charge consists primarily of premiums paid and the write-off
of unamortized debt issuance costs and discounts. The total loss on early extinguishment of debt was
$647 million, with $259 million included in continuing operations and $388 million allocated to
Covidien and Tyco Electronics and included in discontinued operations.
6. Income Taxes
Significant components of the income tax provision for 2009, 2008 and 2007 are as follows ($ in
millions):
2009 2008 2007
Current:
United States:
Federal ..................................... $(60) $139 $100
State ....................................... 8 4 36
Non-U.S. ..................................... 155 320 163
Current income tax provision ....................... 103 463 299
Deferred:
United States:
Federal ..................................... 22 96 94
State ....................................... (11) (5) 3
Non-U.S. ..................................... (36) (219) (72)
Deferred income tax provision ...................... (25) (128) 25
$ 78 $ 335 $324
108 2009 Financials