ADT 2011 Annual Report Download - page 152

professional fees and banking services. See Note 2 to our Consolidated Financial Statements for further
information.
Corporate expense decreased $108 million, or 18.9%, to $462 million for year ended September 24,
2010 as compared to $570 million for the year ended September 25, 2009. Corporate expense during
2009 was negatively affected by approximately $125 million of charges related to legacy securities
matters partially offset by a $16 million benefit related to a settlement reached with a former executive.
Restructuring charges decreased to $1 million for the year ended September 24, 2010 as compared to
$10 million in the year ended September 25, 2009. Corporate expense was also favorably impacted by
savings realized through cost containment and restructuring charges. These decreases in Corporate
expenses were partially offset by a $52 million net asbestos charge recorded during the third quarter of
2010 as compared to a $37 million net asbestos charge in 2009, both of which were recorded in
conjunction with the valuation of our asbestos-related liabilities and insurance assets. In addition,
$4 million of divestiture charges, net, and $3 million of acquisition costs were recorded during the year
ended September 24, 2010 as compared to $6 million of divestiture charges, net, and nil of acquisition
costs for the year ended September 25, 2009.
Interest Income and Expense
Interest income was $34 million in 2011, as compared to $31 million and $44 million in 2010 and
2009, respectively. Interest income increased in 2011 primarily due to increased investment yields
compared to 2010, while investment yields continue to be lower than those experienced in 2009.
Interest expense was $244 million in 2011, as compared to $284 million and $301 million in 2010
and in 2009, respectively. The weighted-average interest rate on total debt outstanding as of
September 30, 2011, September 24, 2010, September 25, 2009 was 5.9%, 6.3% and 6.6%, respectively.
The decreases in interest expense and weighted-average interest rate are primarily related to savings
realized from the replacement of higher coupon notes with lower coupon notes over the past year,
including the redemption of 6.375% notes due 2011 and issuance of 3.375% notes due 2015 during the
third quarter of 2010 and the maturity of 6.75% notes due 2011 and issuances of the 3.75% notes due
2018 and 4.625% notes due 2023 during the second quarter of 2011.
Other Expense, Net
Other expense, net of $16 million in 2011, primarily relates to our share of Atkore’s net loss of
$9 million, which is accounted for under the equity method of accounting, and a decrease in the receivables
due from Covidien and TE Connectivity under the Tax Sharing Agreement of $7 million. See Note 7 to the
Consolidated Financial Statements.
Other expense, net of $75 million in 2010, primarily related to a charge of $87 million as a loss on
extinguishment of debt on the redemption of our 6.375% public notes due 2011, 7% notes due 2028
and 6.875% notes due 2029. See Note 12 to the Consolidated Financial Statements. This loss was
partially offset by an $8 million gain recorded as a result of an increase in the receivables due from
Covidien and TE Connectivity under the Tax Sharing Agreement.
Other expense, net of $7 million in 2009, primarily related to a $14 million charge recorded as a
result of a decrease in the receivables due from Covidien and TE Connectivity under the Tax Sharing
Agreement, which was partially offset by income of $5 million relating to a gain on derivative contracts
used to economically hedge the foreign currency risk related to the Swiss franc denominated dividends.
Effective Income Tax Rate
Our effective income tax rate was 17.2% and 10.9% during the years ended September 30, 2011
and September 24, 2010, respectively. The increase in our effective income tax rate was primarily
2011 Financials 49