ADT 2010 Annual Report Download - page 185

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Acquisitions (Continued)
deferred stock unit awards. The fair value of outstanding Broadview Security stock-based compensation awards, which
immediately vested at the effective time of the acquisition, was attributed to pre-combination service and included in the
consideration transferred. In addition, there were certain Broadview Security stock based compensation awards which did
not immediately vest upon completion of the acquisition. For those awards, the fair value of the awards attributed to pre-
combination service was included as part of the consideration transferred and the fair value attributed to post-combination
service is being recognized as compensation expense over the requisite service period in the post-combination financial
statements of Tyco.
Fair Value Allocation of Consideration Transferred to Assets Acquired and Liabilities Assumed
The consideration transferred for Broadview Security has been allocated to identifiable assets
acquired and liabilities assumed as of the acquisition date based on preliminary estimates of fair value.
The final determinations of fair value for certain assets and liabilities remain subject to change based
on final valuations of the assets acquired and liabilities assumed. The Company does not expect the
finalization of the valuation to have a material effect on the allocation, which is expected to be
completed no later than one year from the acquisition date. During the fourth quarter of 2010, the
Company recorded purchase accounting adjustments which were not material individually or in the
aggregate. The following amounts represent the preliminary determination of the fair value of the
identifiable assets acquired and liabilities assumed ($ in millions):
Net current assets(1) ................................................ $ 67
Subscriber systems ............................................... 624
Other property, plant and equipment.................................. 49
Total property, plant and equipment .................................... 673
Contracts and related customer relationships (10-year weighted average useful life) 738
Other intangible assets (4-year weighted average useful life) ................. 12
Total intangible assets ............................................... 750
Net non-current liabilities(2) .......................................... (445)
Net assets acquired ............................................... 1,045
Goodwill(3) ....................................................... 929
Purchase price .................................................... $1,974
(1) As of the acquisition date, the fair value of accounts receivable approximated book value. Included in net current assets is
$32 million of accounts receivable. The gross contractual amount receivable was approximately $35 million of which
$3 million was not expected to be collected.
(2) Included in net non-current liabilities is $442 million of deferred tax liabilities which are recorded in other liabilities in the
Company’s Consolidated Balance Sheet as of September 24, 2010.
(3) The goodwill recognized is primarily related to expected synergies and other benefits that the Company believes will result
from combining the operations of BHS with the operations of ADT Worldwide. All of the goodwill has been allocated to
the Company’s ADT Worldwide segment. None of the goodwill is expected to be deductible for tax purposes.
Actual Broadview Security Financial Results
During the fourth quarter of fiscal 2010, the Company initiated a program to fully integrate
Broadview Security into the Company’s ADT Worldwide segment. During fiscal 2011, Broadview
2010 Financials 97