ADT 2009 Annual Report Download - page 273

TYCO INTERNATIONAL LTD.
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 25, 2009
1. BASIS OF PRESENTATION
Tyco International Ltd. (Tyco or the Company) is the holding company of Tyco Group with a
listing on the New York Stock Exchange (NYSE). Tyco International Ltd.’s principal activity is the
holding of subsidiaries. On March 12, 2009, during Tyco’s annual general meeting, the Company’s
shareholders approved a proposal to move the Company’s jurisdiction of incorporation from Bermuda
to Switzerland (Schaffhausen). Accordingly, the balance sheet at March 12, 2009, has been presented as
the comparative to the accompanying balance sheet at September 25, 2009, and the accompanying
statement of operations reflects results of operations for the period of March 12, 2009, to
September 25, 2009. The financial year of the Company ends on the last Friday of September. The
Company’s shareholders approved the continuation and Tyco became a Swiss company effective
March 17, 2009. The accompanying financial statements comply with Swiss Law. The financial
statements present the financial position of the holding company on a standalone basis. Additionally,
note 12 includes certain supplemental information described under articles 663-663h Swiss Code of
Obligations for the consolidated financial statements of the Company. The notes are presented in Swiss
Francs, with the exception of Notes 9, 12 and 13 which are presented in U.S. Dollar amounts.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Cash and cash equivalents
Cash and cash equivalents are considered to be all cash on hand, deposits and highly liquid
investments with an original maturity of three months or less at time of purchase.
b) Investments in subsidiaries
Investments in subsidiaries are equity interests, which are held on a long-term basis for the
purpose of the holding company’s business activities. They are carried at a value no higher than
their cost less adjustments for impairment. Investments are reviewed quarterly for impairment
based on the portfolio method.
c) Translation of foreign currencies—translation of the U.S. Dollar ($) functional currency into Swiss
Francs (CHF)
Assets, other than investments in subsidiaries, and liabilities are translated at year end exchange
rate. Investment in subsidiaries and shareholders’ equity are translated at historical rates. Income
and expenses are translated using the average exchange rate of the period, except for dividend
income, translated using exchange rate at transaction date. Unrealized exchange losses are
recorded in the statement of operations and unrealized exchange gains are deferred until realized.
d) Financial instruments
The Company may use interest rate swaps, currency swaps and forward and option contracts to
manage risks generally associated with foreign exchange rate and interest rate risk. Derivatives
used for hedging purposes are designated and effective as a hedge of the identified risk exposure
at the inception of the contract. Accordingly, changes in fair value of the derivative contract are
highly effective at offsetting the changes in the fair value of the underlying hedged item at
inception of the hedge and are expected to remain highly effective over the life of the hedge
contract.
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