ADT 2009 Annual Report Download - page 226

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Financial Instruments (Continued)
ended September 26, 2008. As of September 25, 2009 and September 26, 2008, no convertible
debentures remained outstanding.
In December 2006, due to required changes to the legal entity structure to facilitate the
Separation, the Company determined that it would no longer consider certain intercompany foreign
currency transactions to be long-term investments. As a result, the related foreign currency transaction
gains and losses on such investments were recorded in the Consolidated Statements of Operations
subsequent to this determination rather than to the currency translation component of accumulated
other comprehensive (loss) income within shareholders’ equity. Forward contracts that were previously
designated as hedges of these net investments, continued to be used to manage this exposure but were
no longer designated as net investment hedges. The remaining forward and option contracts were
marked to market with changes in the derivatives’ fair value recognized in the Consolidated Statements
of Operations.
Previously, the Company hedged its net investment in certain foreign operations. Changes in the
fair value of forward contracts qualifying as net investment hedges are reported in the cumulative
translation adjustment component of accumulated other comprehensive (loss) income to the extent the
hedges are effective. The cumulative translation adjustment component of accumulated other
comprehensive (loss) income includes a net loss of $299 million and $91 million during 2007 and 2006,
respectively, for hedges of the foreign currency exposure of the Company’s net investment in certain
foreign operations. In connection with the Separation and the debt tender, the Company de-designated
its 6.125% Euro denominated public notes due 2007 on March 29, 2007, its 5.5% Euro denominated
public notes due 2008 and its 6.5% British pound denominated public notes due 2031 on May 21, 2007,
that had previously been considered as hedges of net investments in certain foreign operations. As of
September 28, 2007, the Company did not hedge its net investments in foreign operations, and all of its
outstanding borrowings were denominated in U.S. dollars.
15. Commitments and Contingencies
The Company has facility, vehicle and equipment leases that expire at various dates through the
year 2027. Rental expense under these leases was $392 million, $415 million and $406 million for 2009,
2008 and 2007, respectively. The Company also has facility and equipment commitments under capital
leases.
Following is a schedule of minimum lease payments for non-cancelable leases as of September 25,
2009 ($ in millions):
Operating Capital
Leases Leases
2010 ........................................... $ 253 $ 22
2011 ........................................... 203 28
2012 ........................................... 147 7
2013 ........................................... 89 8
2014 ........................................... 51 7
Thereafter ...................................... 123 50
$ 866 122
Less: amount representing interest ..................... 31
Total minimum lease payments ...................... $ 91
134 2009 Financials