ADT 2010 Annual Report Download - page 179

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Divestitures (Continued)
In May 2008, the Company sold 100% of the stock of ETEO, a Brazilian subsidiary of the
Company’s Infrastructure Services business for $338 million of net cash proceeds and recorded a pre-
tax gain of $232 million, including the effects of the economic hedge of the purchase price discussed
below. 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. ETEO was
part of the Company’s Corporate and Other. During September 2007, Tyco entered into an economic
hedge of the Brazilian Real denominated contractual sale price of the ETEO business. Since the
hedging transaction was directly linked to the proceeds from the sale of a business that was reflected in
discontinued operations, Tyco began including the impact of the hedge in discontinued operations
during the first quarter of 2008. During the third quarter of 2008, Tyco incurred a pre-tax loss of
$36 million on this hedge.
Additionally in fiscal year 2008, the Company settled a contract dispute arising under its former
Infrastructure Services business. In connection with the settlement, the Company assessed its assets
under the original contract and concluded the assets were no longer recoverable, resulting in a $51
million charge to discontinued operations.
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. 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
$8 million pre-tax loss on sale. The loss was recorded in income from discontinued operations, net of
income taxes in the Company’s Consolidated Statements of Operations for the year ended
September 26, 2008.
Net revenue, income from operations, (loss) gain on sale and income tax expense for discontinued
operations for 2010, 2009 and 2008 are as follows ($ in millions):
2010 2009 2008
Net revenue ........................................... $326 $358 $1,687
Pre-tax income from discontinued operations ................... $ 28 $ 23 $ 94
Pre-tax (loss) gain on sale of discontinued operations ............. (5) 33 484
Income tax expense ...................................... (16) (9) (87)
Income from discontinued operations, net of income taxes ......... $ 7 $ 47 $ 491
2010 Financials 91