ADT 2011 Annual Report Download - page 187

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation—The Consolidated Financial Statements include the consolidated accounts of
Tyco International Ltd., a corporation organized under the laws of Switzerland, and its subsidiaries
(Tyco and all its subsidiaries, hereinafter collectively referred to as the ‘‘Company’’ or ‘‘Tyco’’). The
financial statements have been prepared in United States dollars (‘‘USD’’) and in accordance with
generally accepted accounting principles in the United States (‘‘GAAP’’). Certain information described
under article 663-663h of the Swiss Code of Obligations has been presented in the Company’s Swiss
statutory financial statements for the year ended September 30, 2011. Unless otherwise indicated,
references to 2011, 2010 and 2009 are to Tyco’s fiscal years ending September 30, 2011, September 24,
2010 and September 25, 2009, respectively.
During the first quarter of fiscal 2011, the Company realigned its Safety Products segment between
its ADT Worldwide and Fire Protection Services segments to create two new segments: Tyco Security
Solutions and Tyco Fire Protection. Tyco Security Solutions consists of the former ADT Worldwide
segment as well as the portion of the former Safety Products segment that manufactures security
products including intrusion, security, access control and video management systems. Tyco Fire
Protection consists of the former Fire Protection Services segment as well as a number of businesses
from the former Safety Products segment including the fire suppression and life safety products
businesses. In addition, various businesses were realigned between Tyco Security Solutions and Tyco
Fire Protection. See Note 21.
As a result of this realignment, as well as the sale of a majority interest in the Electrical and Metal
Products business (See Note 3), the Company has three core businesses: Tyco Security Solutions, Tyco
Fire Protection and Tyco Flow Control.
Revenue related to the sale of electronic tags and labels utilized in retailer anti-theft systems is
classified as revenue from product sales. In reporting periods prior to the first quarter of fiscal 2010,
revenue related to the sale of electronic tags and labels utilized in retailer anti-theft systems was
misclassified as service revenue. Such item had no effect on net revenue, operating income (loss), net
income (loss) and cash flows. No changes have been made to previously filed financial statements or in
the comparative amounts presented herein, as the effect in prior periods is not material. Revenue
related to the sale of such electronic tags and labels reflected as service revenue was $286 million in
2009 and related cost of services was $176 million in 2009.
Effective June 29, 2007, Tyco completed the spin-offs of Covidien and TE Connectivity, formerly
the Healthcare and Electronics businesses, respectively, into separate, publicly traded companies (the
‘‘2007 Separation’’) in the form of a distribution to Tyco shareholders.
The Company has a 52 or 53-week fiscal year that ends on the last Friday in September. Fiscal
2011 was a 53-week year which ended on September 30, 2011. Fiscal years 2010 and 2009 were 52-week
years.
Principles of Consolidation—Tyco conducts business through its operating subsidiaries. The
Company consolidates companies in which it owns or controls more than fifty percent of the voting
shares or has the ability to control through similar rights. Also, the Company consolidates variable
interest entities (‘‘VIE’’) in which the Company has the power to direct the significant activities of the
entity and the obligation to absorb losses or receive benefits from the entity that may be significant. All
intercompany transactions have been eliminated. The results of companies acquired or disposed of
during the year are included in the Consolidated Financial Statements from the effective date of
84 2011 Financials