ADT 2010 Annual Report Download - page 205

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Debt (Continued)
prices to determine the fair value of its debt that is traded in active markets. As of September 24, 2010
and September 25, 2009, the fair value of the Company’s debt that was actively traded was
$4,730 million and $4,338 million, respectively. When quoted market prices are not readily available or
representative of fair value, the Company utilizes market information of comparable debt with similar
terms, such as maturities, interest rates and credit risk to determine the fair value of its debt that is
traded in markets that are not active. During the third quarter of 2010, the Company redeemed its
public notes due 2028 and 2029. As a result, all of the Company’s debt was actively traded as of
September 24, 2010. As of September 25, 2009, the fair value of the Company’s debt that was not
actively traded was $40 million. Additionally, the Company believes the carrying amount of its
commercial paper of $200 million as of September 25, 2009 approximated fair value based on the
short-term nature of such debt. As of September 24, 2010, there was no commercial paper outstanding.
Commercial Paper
In May 2008, Tyco International Finance S.A. (‘‘TIFSA’’) commenced issuing commercial paper to
U.S. institutional accredited investors and qualified institutional buyers. Borrowings under the
commercial paper program are available for general corporate purposes. As of September 24, 2010,
TIFSA had no commercial paper outstanding. As of September 25, 2009, TIFSA had $200 million of
commercial paper outstanding, which bore interest at an average rate of 0.33%.
Credit Facilities
The Company’s committed revolving credit facilities totaled $1.69 billion as of September 24, 2010.
This consists of a $500 million senior unsecured revolving credit agreement with a three year term due
2011 (‘‘the 2011 revolving credit facility’’) and a $1.19 billion senior revolving credit agreement with a
five year term due 2012 (‘‘the 2012 revolving credit agreement’’). These revolving credit facilities may
be used for working capital, capital expenditures and general corporate purposes. As of September 24,
2010, there were no amounts drawn under these facilities. Interest under the revolving credit facilities is
variable and is calculated by reference to LIBOR or an alternate base rate.
TIFSA’s bank credit agreements contain customary terms and conditions, and financial covenants
that limit the ratio of the Company’s debt to earnings before interest, taxes, depreciation, and
amortization and that limit its ability to incur subsidiary debt or grant liens on our property. The
Company’s indentures contain customary covenants including limits on negative pledges, subsidiary debt
and sale/leaseback transactions. None of these covenants are considered restrictive to the Company’s
business.
On January 29, 2009, the Company repaid $686 million to extinguish the entire outstanding
balance under its revolving credit facilities. As of September 25, 2009, there were no amounts drawn
under these facilities, although the Company had dedicated $200 million of availability to backstop its
outstanding commercial paper.
Debt Issuances/Repayments
Fiscal 2010
On May 5, 2010, TIFSA issued $500 million aggregate principal amount of 3.375% notes due on
October 15, 2015, which are fully and unconditionally guaranteed by the Company (the ‘‘2015 notes’’).
TIFSA received net proceeds of approximately $495 million after deducting debt issuance costs of
2010 Financials 117