ADT 2011 Annual Report Download - page 196

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
a reporting unit is less than its carrying amount, performing the traditional two step goodwill
impairment test is unnecessary. If an entity concludes otherwise, it would be required to perform the
first step of the two step goodwill impairment test. If the carrying amount of the reporting unit exceeds
its fair value, then the entity is required to perform the second step of the goodwill impairment test.
However, an entity has the option to bypass the qualitative assessment in any period and proceed
directly to step one of the impairment test. The guidance is effective for Tyco for interim and annual
impairment testing beginning in the first quarter of fiscal 2013, with early adoption permitted. The
Company is currently assessing the timing of its adoption of the guidance.
2. 2012 Separation Transaction
On September 19, 2011, the Company announced that its Board of Directors approved a plan to
separate the Company into three separate, publicly traded companies consisting of the Company’s
North American residential security business, its flow control business, and its commercial fire and
security business. The 2012 Separation is expected to be completed by the end of the third calendar
quarter of 2012 through a tax-free pro rata distribution of all of the equity interest in the flow control
and North American residential security business.
Completion of the proposed separation is subject to certain conditions, including final approval by
the Tyco Board of Directors and shareholders, receipt of tax opinions and rulings and the filing and
effectiveness of registration statements with the SEC. The separation will also be subject to the
completion of any necessary financing.
During the quarter and year ended September 30, 2011, the Company incurred $24 million of costs
within selling, general and administrative expenses in the Company’s Consolidated Statement of
Operations, primarily related to professional fees and banking services.
3. Divestitures
The Company has continued to assess the strategic fit of its various businesses and has pursued the
divestiture of certain businesses which do not align with its long-term strategy.
Fiscal 2011
On November 9, 2010, the Company announced that it entered into an investment agreement (the
‘‘Agreement’’) to sell a majority interest in its Electrical and Metal Products business to an affiliate of
the private equity firm Clayton, Dubilier & Rice, LLC (the ‘‘Investor’’). The Company formed a newly
incorporated holding company, Atkore International Group Inc. (‘‘Atkore’’), to hold the Company’s
Electrical and Metal Products business. On December 22, 2010, the transaction closed and the Investor
acquired shares of a newly-created class of cumulative convertible preferred stock of Atkore (the
‘‘Preferred Stock’’). The Preferred Stock initially represented 51% of the outstanding capital stock (on
an as-converted basis) of Atkore. In connection with the closing, the Company received cash proceeds
of approximately $713 million and recorded a gain of $259 million during the first quarter of 2011.
During the year ended September 30, 2011, the Company recorded a net working capital adjustment of
$11 million that reduced the gain on disposal. The gain on disposal is recorded within restructuring,
asset impairment and divestiture (gains) charges, net in the Company’s Consolidated Statements of
Operations.
2011 Financials 93