ADT 2010 Annual Report Download - page 269

TYCO INTERNATIONAL LTD.
NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 24, 2010
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. Effective March 17, 2009, following shareholder and Board of Director approval
on March 12, 2009, the Company ceased to exist as a Bermuda corporation and continued its existence
as a Swiss corporation under articles 620 et seq. of the Swiss Federal Code of Obligations. Accordingly,
the accompanying comparative statement of operations reflects results of operations for the period of
March 12, 2009, to September 25, 2009.
The Company has a 52 or 53-week fiscal year that ends on the last Friday in September. Unless
otherwise indicated, references in the financial statements to 2010 and 2009 are to the Company’s fiscal
year ended September 24, 2010 and for the period of March 12, 2009, to September 25, 2009,
respectively.
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 13 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 4, 6, 11, 13 and 14 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, which is translated using the exchange rate at the 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 risk 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
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