ADT 2009 Annual Report Download - page 217

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Debt (Continued)
On January 15, 2009, TIFSA made a payment of $215 million to extinguish all of its 6.125% notes
due 2009 which matured on the same date. Additionally, in November 2008, TIFSA made a payment of
$300 million to extinguish all of its 6.125% notes due 2008.
See Note 26 for information regarding $500 million of 4.125% notes issued subsequent to
September 25, 2009.
Debt Tenders
In connection with the settlement of litigation arising from the Separation related to the
Company’s public debt, on June 3, 2008 the Company, along with its finance subsidiary TIFSA, a
wholly-owned subsidiary of the Company and successor company to Tyco International Group S.A.
(‘‘TIGSA’’), a wholly-owned subsidiary of the Company organized under the laws of Luxembourg,
consummated consent solicitations and exchange offers related to certain series of debt issued under
the Company’s 1998 and 2003 indentures. In connection with the exchange offers, Tyco issued
$422 million principal amount of 7.0% notes due 2019 in exchange for an equal principal amount of
7.0% notes due 2028 and $707 million principal amount of 6.875% notes due 2021 in exchange for an
equal principal amount of 6.875% notes due 2029. In connection with the consent solicitations, holders
of the Company’s 6.0% notes due 2013, 6.125% notes due 2008, 6.125% notes due 2009, 6.75% notes
due 2011, 6.375% notes due 2011, 7.0% notes due 2028 and 6.875% notes due 2029 collectively
received consent payments totaling $250 million.
The terms of the consent and exchange offers were evaluated as a debt modification in accordance
with the authoritative guidance for debtor’s accounting for a modification or exchange of debt
instruments, and it was determined that the 7.0% notes due 2028 and the 6.875% notes due 2029 were
extinguished because the cash flows of the new bonds as compared to the original bonds were
substantially modified. As a result, the new bonds and the 7.0% notes due 2028 and the 6.875% notes
due 2029 that were not tendered for exchange were recorded at their fair value upon completion of the
exchange offers. In determining fair value, the Company measured the bonds as if they were an initial
issuance to the public. This was done by obtaining effective yield data derived from comparable pricing
received from the issuance of bonds with similar ratings and covenants by large public companies.
During the year ended September 26, 2008, in connection with the consent solicitations and
exchange offers, the Company recorded a $222 million charge to other expense, net as a loss on
extinguishment of debt. This charge was comprised of the consent payments related to the extinguished
bonds (notes due 2028 and 2029), premium on the exchanged bonds which represents the difference
between the fair value and the book value of the extinguished bonds, and the write-off of the original
unamortized debt issuance costs, as well as fees paid to third-parties associated with the bonds that
were not deemed extinguished. The remaining portion of the consent payment and issuance costs will
be amortized over the remaining life of the bonds.
During the year ended September 28, 2007, the Company recorded a $259 million charge to other
expense, net for the loss on early extinguishment of debt related to the debt tender offers in connection
with the Separation.
2009 Financials 125